The economist’s story about a possible recession is also a call for global economies to “start preparing now, while it still can.” As far as the local economy is concerned, some foreign companies are holding back on their plans to expand as they anticipate the effects of the proposed second package of tax reforms, the Tax Reform for Attracting Better and High-quality Opportunities (Trabaho). Add to this the uncertainties surrounding the government’s plan to shift to a federalist government and the election-related political chaos looming before us.
The general public still reels from the effects of inflation, so all of the global and local economic and political movements are adding up to the increasing burden of the ordinary citizen. We are not alone, as other countries, especially the emerging economies, are also undertaking belt-tightening measures at this time.
We harken back to better days just a year ago when almost all of the economies of the world were enjoying steady growth. The United States then decided to tighten its economic policies, leading to trade wars between the US and some countries, which was clearly one of the reasons many economies are now feeling the pain.
The American economy continues to boom—its unemployment rate is low, interest rates are high and the dollar is strong. Countries in debt, therefore, are finding it more difficult to repay their dollar obligations. Argentina, Turkey, and recently Pakistan are a few of the countries that are being negatively affected by the USA’s rising economic power.
For emerging economies like ours, and even for big ones except the US, growth will be slow—that’s according to the International Monetary Fund. Incidentally, emerging economies account for 59 percent of the world’s output.
Many local businessmen are hoping that the administration would stop creating political uncertainties, as these inevitably lead to economic uncertainties. Economic experts, on the other hand, are also hoping that global markets will cooperate and help each other at this challenging time, as this measure proved to be helpful in overcoming the financial crisis of 2008. We don’t know how possible that is this time, given the current economic and political tensions brewing among some of the nations.
With the grim international picture and the uncertainty in our local environment, the government, our economic managers and policy-makers need to be scrambling now to prepare for what lies ahead, while there is still time. And even if the future turns out fine, there will be nothing lost if we make ourselves ready. Economic experts, however, are saying that economies, even the big ones, are not prepared for even a mild recession.
So obviously there is an urgent need to really look into all possible monetary and fiscal solutions.