THE slight increase in workers’ remittances reported for October prompted a host of questions directed to me. Here are the responses. The rise is too small to matter. In fact, it falls far short of what it needs to be to serve its purpose: helping plug the trade deficit. There is no reason in the world for celebration based on one data outturn. What matters is the trend that a series of data points describe; most often, that trend is intelligible only when seen in its proper context.

So what is the proper context for remittances? First, remittances are traditionally how Pakis­tan’s economy finances its trade deficits. The trend is cyclical and reveals itself when you take a 12-month average of the total trade balance plus remittances, then plot that on a month-to-month basis. You will notice something. A wavy line emerges. From a low point in 2015, it rises slowly until it briefly turns positive — around $40 million — in November 2015. Then it plunges back below the X-axis, before bottoming out in July 2018 at around negative $1.45 billion.

This is trade balance plus remittances, mind you, so a negative value means remittances can’t plug the trade deficit, and the balance is being financed from reserves or borrowing. If you don’t see the reserves plunging by the same amount in that month, then you can be sure the balance is being financed by new borrowing, and that data will show up in the balance-of-payments whenever the........

© Dawn