Pakistan is in vicious cycle: An insight into market trade

The volume of Pakistan’s economic market is increasing, but not booming.

The overall market is moving while the government ministers use these terms to explain the health of the market.

Let’s delve into this:

Artificially Made Market

Think of the economy as a puzzle.

When you put the pieces together to make the puzzle, you want them to fit perfectly, right?

Well, Pakistan's economy is like that puzzle, but sometimes the pieces are forced together, making it look complete when it's not. That's what happens when you artificially boost the market, it might seem like things are going well, but underneath, it's not as sturdy as it seems.

Decoding GDP

Now, let's talk about GDP.

It's like a report card for a country's economy, showing how much money is flowing in and out.

Think of it this way: C+I+G+(X-M) is like looking at all the different parts of a budget: what people spend (consumption), what businesses invest (investment), what the government spends (government spending), what the country sells abroad (exports), and what it buys from other countries (imports). The government's job is to make sure this report card keeps looking good by keeping the economy running smoothly.

Fiscal Deficit

Imagine if you spent more money than you made in a month. That's basically what happens when a country has a fiscal deficit.

It's like going over budget. The government spends more money on stuff like schools, hospitals, and roads than it brings in from taxes. So, it has to borrow money to make up the difference, which adds to the country's debt.

Circular Debt

Ever heard of robbing Peter to pay Paul?

Well, circular debt is a bit like that.

It happens when the government gives discounts on things like electricity, but then doesn't have enough money to pay the companies that provide it. So, it borrows more money to cover the bills, but then has even less money later on. It's like a never-ending loop that just keeps getting bigger.

Current Account Deficit

Picture a piggy bank: you put money in when you get it and take money out when you need it.

But what if you kept taking out more money than you put in?

That's kind of what happens with a current account deficit. Pakistan spends more on stuff from other countries than it makes from selling its own stuff abroad, so the piggy bank keeps getting emptier.

Domestic and External Debt

Debt is like taking out a loan, you get money now, but you have to pay it back later, with interest.

When the government borrows money from people or businesses within the country, it's domestic debt.

But when it borrows money from other countries, it's external debt. And right now, Pakistan owes a whole lot of money. It's kind of like having a huge credit card bill that just keeps getting bigger.

In a nutshell, Pakistan's economic puzzle is missing some pieces, and until we figure out how to fit them together properly, it's going to be a bumpy ride.