Appearing on a nighttime show named, “Dunya Kamran Khan Ke Sath”, Chairman AKD Securities Aqeel Karim Dhedhi shed light on the recent economic figures and talked about how the gloomy picture we see today won’t last long.
Replying to a comment by the show’s host, chairman AKD first talked about the recent trade deficit figures that have taken a huge plunge since being positive at the start of the calendar year.
It is worth mentioning here that according to the recent State Bank data for the month of June 2021, the current account deficit has increased from $650 million in May 2021 to $1,644 million in June 2021. This is a huge drop as the incumbent government has been focused on keeping the current account positive.
Expansion of the economy
Aqeel Karim Dhedhi said that this fall in the current account is due to the expansion in the economy. He said that the import in machinery has gone up in the second half of the FY21, showing a 15 percent increase.
He claimed that the State Bank has lent Rs500 billion for the import of machinery, and this is good news in the long term as it is capital expenditure, and will become a source of increased exports in the future.
On the increase in inflation in the country, Chairman AKD securities said that the commodity prices have surged around the world, and no country is spared of this issue. He even claimed that, unlike many countries, Pakistan has been able to successfully manage its inflation.
The reason for this he claimed is the global supply chain being interrupted by the pandemic, and now that the upward demand shock has been observed, the prices have gone up.
He said that the freight cost is the major contributor to this problem. However, he said Pakistan must rejoice that the wheat production in the country saw a bump, that Pakistan would not be impacted this much by the issues.
Mr. Dhedhi said that Pakistan’s exports for the month of June 2021 stood at $2.8 billion, and it would become $34 billion for the fiscal year. On the other hand, he said that if the remittances come up to $30 billion, the $64 billion in capital inflow from these two sources is very good for the country.
He claimed that if the expansion happens as seen, Pakistan’s exports can hit $37 to $40 billion in the fiscal year 2022, arguing that the overall economy is heading towards major expansion as demand is expected to rise.
Commenting on the recent policies such as Housing, Auto and Textile policies would lead to increased demand in the economy, so much so that the industries will have to expand.
He quoted the expansions in the cement sector in the FY21, saying that all different industries will have to follow suit.
Kamran Khan interjected saying that the energy sector can serve as a major deterrent to such “good policies” as Aqil Kareem Dhedhi claimed them to be.
Energy Sector
Chairman AKD securities replied to this saying that the energy sector has always been a problematic part of Pakistan’s economy and these problems in the sector have persisted for a long time.
He added that now, these problems are being solved, as the demand for energy has increased.
He said that the problem of IPPs couldn’t be solved by the government committee, but as the demand for energy increases in the economy, the circular debt would not even be an issue.
He said that the production capacity was 35 thousand megawatts of energy and the demand was between 15-20 thousand megawatts, leading to exorbitant expenses in terms of capacity payments.
He said that the loss is also due to the LNG subsidy given by the government.
He said that the government should take arduous steps to overcome the problems in the energy sector. The government should mix LNG with gas to provide for people.
He said all the PSEs such as Sui Northern and PSO are at a loss.
Chairman AKD Securities advised the business community to sit with the government and help it, rather than only taking advantage of the government.
He said that the government should not be made weak but advised by the private sector to overcome issues like the circular debt.