Can decrease in trade deficit improve economic situation?

Pakistan faced a high trade deficit last year. It reached 8.9 pc due to improper decisions of the present government. The government set dispensation, including two mini budgets for the ongoing year. Finally, the government has been able to reduce the trade deficit for FY19. 

Increase in fuel prices as well as inflation

Contradictorily, a reduction in trade deficit is the only good news in this fiscal year for Pakistan. It is so because the government has not catered with the severity of the industries in Pakistan. Inflation is on the increasing trend due to the gap between supply & demand in oil and gas reserves.

The promise of the government, to not increase the prices of petrol and oil, seems to be exasperated for people. Inflation is continuously growing in the country as the industrial products have a direct impact on the increase in oil and petrol.

Paramount challenges of major industries of Pakistan

Apart from the fiscal report, two major sectors of Pakistan are facing challenges. The industrial and agricultural sectors are unfortunate this year. The major factor of the downfall is the high prices of petroleum products. Moreover, agriculture is getting affected by the inadequate water supply. Farmers are also cultivating at a high cost due to unfavourable factors in irrigation.

Leveraging investment benefits for local and foreign investors

Foreign investment is encouraged by the government. The return on business investments is also slow and unbearable by the business owners with a high inflation rate in the country. Investors are also observing informality in every field of business. Wherever the government wants to establish stability, existing business owners stand against the government.

The political environment is also not stable at the moment, which is creating an unfavourable situation for the existing as well as new businesses. 

Précising, the country is passing through an imperceptible time. Presently, the government should take initiatives to reduce fuel prices in the country. Moreover, it should emphasize the industries which possess a huge contribution to the economy.