There exists overwhelming empirical evidence across countries and across time that political instability is negatively related to economic growth and performance. Political instability lowers private investment, slows economic growth and gives rise to unemployment and poverty. Political instability breeds corruption, mis-governance, limits policy-makers’ vision and creates volatility in economic performance.
Pakistan is witnessing a prolonged period of political instability and as such its adverse consequences for the economy are quite visible. The present Government has failed to find its foot on the ground and continued to lurch from one crisis to another. Political instability persisted throughout taking a heavy toll on the economy. The Government found itself hapless in addressing socio-economic problems in general and external shocks in particular. It gave the impression of having little sense of direction and purpose. It is strange that the incumbent Government, claiming to have a strong majority in Parliament, has failed to create political stability in the country. People within and outside the country had a lot of expectations about political stability, strengthening of democracy, rule of law and respect for judiciary. The present coalition Government completely disappointed the friends of democracy within and outside the country. Print and electronic media continues to highlight the stories of corruption and bad governance that certainly have weakened the Government and the writ of the State.
A series of events over the last one year and their inept handling contributed to acceleration of political instability in the country. The defiance of Imran Khan and his party PTI to Nawaz Government, the incident of Army Public School, suicide attacks in parts of Pakistan, and many more have continued to weaken the Government and bred political instability. Political instability weakens governance as the Government continues to strive for its survival with economy getting the least attention.
Pakistan’s current state of the economy is the mirror image of the adverse consequences of political instability. Pakistan is witnessing its investment declining, economic growth slowing, unemployment rising, millions slipping below poverty line, women and children dying in stampedes for a few kgs of Ata, exchange rate depreciating and fuelling inflation and contributing to the surge in public debt.
Pakistan also saw its relations with international financial institutions deteriorating, the Friends of Pakistan showing reluctance in providing financial support and hence overall balance of payment turning negative, foreign investors losing confidence in Pakistan’s economy and economic managers with consequent nose-diving of foreign investment. In short, a relatively stable and resurgent economy has been destroyed in the last few years owing mainly to mis-governance bred by political instability.
— Via email