Pakistan’s economy is improving but don’t get too excited

Pakistan’s economy has been into dole drums recently.

A stable civilian government, after the fresh election, having a clear and sizable mandate will be required to maintain and stabilize the economic woes of the country.

The polls have been finalised and 8th February has been announced as Election Day. The fresh election will bring the much-needed stability that hinges on Pakistan’s economy.

As for the current status of the government of Pakistan has achieved or exceeded the fiscal targets set for the first quarter.

Although it has been achieved by the help of the IMF. The caretaker government is on track to get the next $710m worth of aid next month. The next review will take place in February, shortly after.

The fresh elections

During the first quarter, the caretaker government successfully brought down the fiscal deficit to 0.9% of GDP, which was 1% during the last year.

Our GDP is increasing steadily. There is an increase in industrial, agricultural, and services sectors.

Negotiations are also going on to restart the CPEC at a renewed speed. While all this is the reason for optimism, it is essential to approach the development perspective cautiously.

Pakistan’s textile exports play a vital role in Pakistan’s economy. The Generalised system of preferences (GSP) plus its status with the European countries has greatly helped and provided a favorable trade atmosphere with Europe.

The Pakistani diaspora has always been an important source of remittances. It has also increased recently.

Foreign investment

Foreign investment has also been increasing showing confidence in the government policy. The current surge in the stock market is a clear indicator of the improved confidence of investors.

Looking at these indicators and how promising they might appear we must not become too pleased. There are too many challenges to be met, and many issues to be addressed.

Public debt

The first and foremost obstacle is to overcome the fiscal deficit and public debt. The second problem is inflation. The high percentage of inflation has badly influenced the community’s purchasing power.

Unemployment

Despite the economic growth, unemployment is still a big problem, particularly among the youth.

Political instability is the greatest hindrance to economic growth. Recently the political landscape has been very tumultuous.

Adding fuel to this instability is the mounting security threats. The raging menace of terrorism, which had been brought to control some years back has been unleashed again. The security concerns always deter foreign investors and scare the local ones too.

Pakistan’s improving economy is undoubtedly promising, but we must be very cautious. Developing an environment conducive to bringing foreign investment and providing a safe harbor for its flourishing, creating job opportunities, and reducing the GDP deficit will certainly improve the economy gradually.

There is still so much to be done to get a secure future for Pakistan’s economy.

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