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PM Imran Khan's latest interview with Financial Times

dexter

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The Pakistan prime minister talks to the FT's Stephanie Findlay about how close India and Pakistan came to war and his country's growing reliance on China.
 
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As per the financial talk; Pakistan must try to reduce imports.

Aggregate Demand (AD) consists of Consumption (C) + Investment (I) + Government Spending (G) + (Exports (x) - Imports (M)).
AD = C + I + G + (X-M)

Pakistan can increase interest rates (which we have done), that will reduce spending by households and firms as there is more incentive to save and not to spend. We could use protectionism however there could be reciprocal tariffs put on us. Lastly we could try to make our goods & services more competitive (i.e lower prices). Using the following methods will improve the current account and should make a difference.

Reducing government spending is not always the best way to reduce the economic burden on the government. Spending in the economy usually leads to the multiplier affect, resulting in a larger increase in Real GDP than the initial investment.
 
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