Share:

Pakistan's economic position has improved sharply since it came close to default in 2013 and the present government has been facing major issues right from the beginning of their tenure, they still aren’t quitting.

The economy was mired in persistent energy deficiencies, declining development expenditures, rising inflation and meager foreign exchange reserves. As a result the country’s economic potential was on the decline and investor confidence was badly shaken.

But as the matters are now being tackled in a much more professional way, the economic situation has started getting better.

Pakistani economy has made progress in the last three years. On the contrary, a number of advanced economies were still dealing with legacy of international economic crisis.

This is an important signal given the changing global landscape, where economic dynamism has gradually been shifting from advanced to emerging market economies.

The steps taken to overcome the energy shortages in the country, to eliminate extremism, stabilise the economy and initiatives regarding provision of education and health related social safety nets.

The government has acquired strong economic fundamentals and is now in a position to focus on further aligning its policies to meet the Sustainable Development Goals of the United Nations.

Prudent fiscal and effective monetary policies, coupled with regular monitoring of prices both at federal and provincial level, along with decline in international commodities and fuel prices, has helped in containing inflation.

Pakistan has made significant progress in regaining macroeconomic stability over the past four years under the present government. Pakistan has achieved macroeconomic stability: the fiscal deficit has shrunk from 8 percent to below 5 percent, international reserves have tripled to over $18b, and the rate of growth has increased by a full percentage point to 4.7 percent.

Pakistan has made impressive economic gains in the last three years characterised by macroeconomic stability, fiscal discipline, sustained growth rate and record breaking performance of its stock market.

The achievements in the war against terrorism are equally laudable but that came at a cost. Pakistan being terror-hit is bearing losses, damages for being frontline ally in the international campaign on terror. The success of Operation Zarb-e-Azab and continuation of it in shape of Operation Raddul Fassad is bringing peace and stability in the terror-hit country but at the same time putting the strains to reach the real potential Pakistan economy has to grow.

The present government, after coming to power, took bold decisions that resulted in increasing GDP growth, and tax revenue and economy is projected to be on a steady uphill path due to the initiatives taken by the government.

Pakistan is eyeing 5.7 percent economic growth in the next fiscal year, after a robust performance in the outgoing year ending June 30, helped by lower global oil prices, investment in China-sponsored investment and improvement in energy supplies.

The South Asia’s second-largest economy is expected to grow 4.7 percent this year despite a sluggish cotton output which is the backbone of country’s exports. Textile exports make up more than 50 percent of the country’s total exports. The International Monetary Fund has forecast 4.5 growth for the current fiscal year.

Agriculture sector is expected to grow 3.5 percent; manufacturing sector, 7.7 percent and Services sector, 5.7 percent. Pakistan is also currently seeing growth in various sectors like cement, steel, pharmaceutical, automobile and electronics.

The authorities’ reform efforts continue to strengthen macroeconomic stability, public finances, foreign exchange reserve buffers, and expanded protection of the most vulnerable under the Benazir Income Support Program.

The CPEC initiative has begun to bring tangible benefits to Pakistan's economy, which is likely to have a positive demonstration effect for persuading other countries in the region, India included, to consider adopting a more open attitude about the initiative. The UK and other countries have expressed an interest in increasing investment and being a partner of the CPEC. With efforts in stepping up industrialisation along the CPEC, Pakistan is doing what India and other emerging economies frequently talk about, integrating itself into the global industrial chain.

The reforms, including cutting costly subsidies, privatising some loss-making state companies and building up foreign reserves, has strengthened Pakistan's economy and set it on a path to higher growth.

The overall economic environment is conducive backed by an accommodative monetary policy as policy rate at 5.75 percent is the lowest in last few decades. Inflation during March, 2017 slightly increased to 4.9 percent compared to 3.9 percent y-o-y. During July-March FY 2017 it stood at 4.01 percent compared to last year’s 2.64 percent reflecting higher domestic demand and increase in global commodity prices.

Uptick in credit expansion to private sector has increased to Rs. 393 billion during July-March 2017. There has been a surge in import of machinery of over 42 percent and raw materials pointing to robust industrial activities and build up of future productive capacity of the economy.

The budget deficit, which stood at 8.2 percent of GDP in FY 2013, has been brought down to 4.6 percent in FY 2016. During current FY 2017 it is now projected to be 4.1% of GDP.

In March, 2017, FBR recorded a growth of 16.1 % in revenue collection as it collected Rs 345 billion against a collection of Rs 297 billion in the corresponding month of the last year. Thus, total collection by FBR in first nine months of the current financial year is Rs 2258 billion which is unprecedented in FBR history.

At present, the foreign exchange reserves are hovering around $ 22 billion, which are expected to reach over $ 23 billion by end June 2017. Growth, though volatile and low in some periods, has been quite pro-poor in Pakistan.

As Pakistan continues its march from being a frontier economy to becoming an emerging market, 2017 may be the best year in the country’s 70-year-long history. From increase in foreign investment, creation of Export-Import Bank to likely changes in the auto industry, here’s what we predict will happen to Pakistan’s economy this year.

One can hope that journey towards further progress would continue as Pakistan can maintain high growth rates in the coming years with continuation of current policies. The implementation of necessary economic reforms in the country should continue with determination as it would play a vital role in achieving higher, sustainable and inclusive economic growth.