Credit Crunch and Pak economy
International credit crisis has slowed down the world economy
the World GDP growth was 3.4 in 2008 and 0.5 is expected in 2009
US GDP was 1.1 in 2008 and -1.6 is expected in 09
But it has some positive effects for developing economies including Pakistan
1. Decrease in the prices of major imports oil etc. will help to control inflation, and decrease in trade deficit
2. Though the workers remittances will decrease, but the citizens will try to invest in their native countries.
Now Pakistan has covered most of its trade deficit due to decrease in oil prices, and now instead of giving subsidies she is earning revenue on it.
Yet we need more to do. Unless our Govt. binds its expenditures (particularly non-development) to revenue we'll not be able to cut domestic effective demand and manage inflation, and decrease our fiscal deficit.
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