🧵 Economic devastation post VONC

Some people wish to whitewash Ishaq Dar’s sins, seeking help from their selective amnesia in attempts to put all the blame on Shaukat Tarin for today's economic conditions.

1/n While the petrol subsidy was a horrible and purely political move from Shaukat Tarin, it is overshadowed on the stupidity leaderboard when compared to the events that took place afterwards.

2/n

PMLN did a space session today where big claims were made about their economic performance and how PTI has destroyed the economy.

This is a thread on the mother of all economic blunders by PMLN (Ishaq Dar’s biggest achievement for some) 100 ka $.

(1) Before we start looking at data, we need to first understand how currencies are valued since the general perception is that if a currency depreciating that’s a bad thing, which is not necessarily true.

(2)

Thread: How PMLN govt managed to keep the GDP growth rate high

Every time I debate economy with a PMLN supporter I get 2 arguments:
1. $ 100 ka tha
2. GDP growth 5.8% thi

I address point no.1 in the thread below and now I'm trying to address point no.2

https://twitter.com/Ali_Ghaznavi/status/1389006688741740547?s=20

To begin the discussion we first need to understand the multiplier effect.

Multiplier effect basically says that if money is injected in to an economy from a source (govt in this case) that money is multiplied in the economy.

Thread: An attempt at explaining Pakistan's Economic Woes

Let's start the discussion by looking at the exchange rate . We always hear people saying that Ishaq Dar kept the rupee at an over valued rate which created difficulties for the incoming PTI Govt in 2018.
(1/n) Lets look at the REER (real effective exchange rate).

Let me first explain REER. In simple words REER shows the buying power of a currency at home vs abroad compared to a base year.

In the graph below 2010 is set as the base year.