Answer to Question #257128 in Macroeconomics for Sana

Question

Consider small and medium businesses of any sector of pakistan to see how devaluation of currency has affect these businesses . You can give any examples of businesses too to explain your point. Real life examples must be used

Answer 1

Devaluation of currency in Pakistan has result in high level of inflation. This inflation has led to an increase in prices of real estate in Pakistan.

The employment level has also been dragged to the lowest end. This is worsening the buying power of netizens of Pakistan.

The devaluation of currency has raised external debit and liabilities of the economy. The level of investment has been lowered and the export industry has been negatively affected because exports are being offered to foreigners at cheaper prices.

Imports have been discouraged because because devaluation of currency makes them expensive for domestic consumers.

The manufacturing sector in Pakistan has remained fairly stagnant. During ba period spanning the past 6 decades, Pakistan has only achieved an annual average GDP growth of 4.47 percent with manufacturing sector performance of around 6.3 percent. The manufacturing sector has been unable ti increase its shares over the years.

The figure above shows the growth of GDP and the Manufacturing sector between 1960 and 2012.