Pakistan’s economic trajectory today is not much different from the past. However, the pace is slow, which is visible from the economic growth and external account numbers. In previous cycles, the economy used to move fast, growing over 5 percent, followed by rapid current account slippages. It seems history is repeating itself, albeit in slow motion.

We are sleepwalking into another external account deficit which may not be like the crises the country faced in the previous three cycles. This gives time to retrospect and think on what is required to change direction. What should policymakers do to move towards export-led growth?

The first line of defence is the exchange rate. The obsession with a sticky exchange rate is not good. It cannot sustain and eventually results in a sudden devaluation which is not advisable and has its own adverse consequences. It is always better to depreciate in moderation when required. And to have export-led growth, the currency ought to be undervalued by keeping the REER in the 90s, not over........

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