Sunday, August 11, 2019

Government Spending, Keynesian Economics and Pakistan's Economic Slide in 2018-19

This issue was the beginning of the start of destruction of economy. So many apparently sane people people lost it through his charisma.
We need to take a hard look at how criticism for the sake of criticism destroyed the "development" cycle of Pakistan's economy. Development expenditure on flyovers, metros, motorways etc increases the money circulation, which increases the disposable income of people, which increases the GDP, which increases the growth, which increases the tax/revenue collection of the government, which increases the "development" expenditure. This cycle was destroyed by IK and his uncouth advisors. This is macro economics 101. Take any first level textbook of economics and turn to chapter on Government Spending and growth. Grand Tabdeeli: For the first time in decades our debt is more than our GDP. A two pronged attack on economy (1) destroy GDP, (2) increase debt by the Economic Hitmen of IMF.

Credit: Dr farrukh saleem on Twitter
From Atiq Rehman's wall:
The economy, which is growing at 7%, doubles its size in 11 years. If the economy is growing at 3% then it needs about 25 years to double, while the economy growing at 1% will double in about 50 years.

Our growth rate had reached 5.8% but thanks to Tabdeeli, we everted the growth momentum back to its natural value. We are currently being counted among the slowest countries in South Asia. If this is the case, Bangladesh's income would have doubled after 8/10 years. and we???

To say the growth in Pakistan was 3% but let's look at a few facts

1. In 2018-19, 4% of Pakistani GDP was paid to banks as interest payment. The interest paid for interest in 2019-20 accounts for 5.7% of GDP. Earlier, payments to banks were 3% of GDP in 2017-18. The addition in GDP that we see, goes to banks as interest payment. Therefore, the increase in GDP for the public is almost zero.

2. The population growth rate is about 2%. Thus the increase in per capita GDP is negative.

So after seven to ten years, countries like Bangladesh will have doubled their production and Pakistan will be cited as eample of depreviation and backwardness instead of Ethiopia

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