Where is Pakistan’s economy heading?
LAHORE: Pakistan, being a rather new country, has always had a rocky economy, at times on the verge of bankruptcy.
Even recently, the trade deficit has been falling, with inflation at a mere 0.5%. Most of the country’s problems can be accredited to years of pervasive mismanagement, with the previous governments trying to live beyond means.
Lack of transparency plays a major part in the country’s failing economy, indulgence in money laundering and white collar crimes have left us penny pinching. Debt servicing and military expenditure leaves little room for improvement for our nation.
Now however, the current government seems to be pulling their socks up. Imran Khan has been seen striking multiple deals to try and save Pakistan’s economy, trying to introduce structural changes.
Currently we see meetings going on with IMF’s Managing Director, Christine Lagarde, in Dubai on the World Government Summit where some agreement was reached upon in terms of a monetary investment. “I had a good and constructive meeting with Prime Minister Khan, during which we discussed recent economic developments and prospects for Pakistan in the context of ongoing discussions towards an IMF-supported programme,” said the MD.
She added, “I reiterated that the IMF stands ready to support Pakistan. I also highlighted that decisive policies and a strong package of economic reforms would enable Pakistan to restore the resilience of its economy and lay the foundations for stronger and more inclusive growth.
As emphasised in the new government’s policy agenda, protecting the poor and strengthening governance are key priorities to improve people’s living standards in a sustainable manner.”
Furthermore, adjustments by the State Bank of Pakistan in the exchange rate and the imposition of Regulatory Duties by the government on non-essential items has been seen to result in a sharp reduction in the growth of imports, going from 26% growth down to negative numbers.
The foreign exchange rate has also been growing, going up to 12.5%, including an encouraging rise in the export sector. Support for our Balance of Payments has started coming in following the new government’s foreign policy, plus Bilateral assistance in the form of funds and deferred oil payment facilities in KSA, UAE and other countries has begun to trickle in. All economic trends indicate that our deficits are coming down rapidly to within manageable ranges, which is a very positive sign for the PTI government.
Other than this, $20 billion has been signed for energy projects by the crown prince of Saudi Arab following his visit to Pakistan, along with investments from CPEC; Beijing is funding in Pakistan as part of its global Road and Belt Initiative.
China has already invested $19 billion over the past five years and plans to invest billions more to construct industrial zones.
According to statistics, Pakistan’s Economy is the 23rd largest in terms of purchasing power parity (PPP), and 38th largest in terms of nominal gross domestic product. Pakistan has a population of over 207 million (the world’s 5th-largest), giving it a nominal GDP per capita of $1,641 in 2018, which ranks 147th in the world and giving its PPP GDP per capita of 5,709 in 2018, which ranks 130th in the world for 2018. However, Pakistan’s undocumented economy is estimated to be 36% of its overall economy, which is not taken into consideration when calculating per capita income. Pakistan is a developing country and is one of the Next Eleven countries identified by Jim O’Neill in a research paper as having a high potential of becoming, along with the BRICS countries, among the world’s largest economies in the 21st century.
The economy is semi-industrialized, with centres of growth along the Indus River. Primary export commodities include textiles, leather goods, sports goods, chemicals, carpets/rugs and medical instruments. Considering all of this information, Pakistan’s economy, given proper handling should be headed in the right direction. Current improvements suggest that the right reforms and regulations are being imposed by PTI’s government to ensure that maximum output is being reached.
The writer is studying journalism in Beaconhouse National University and a freelance writer