Saadia Saadat
AN Overseas Pakistanis life revolves around a few million dollar questions. Should we invest in real estate of Pakistan?? Shall we have a second home in Pakistan to strengthen ties with our roots?? Is moving to Pakistan is a viable option?? For the answers we have to ponder upon a few real economic indicators of Pakistan. Pakistan GDP growth rate was 5.53% in 2018. Pakistan foreign reserves crossed $24.billon in 2016 and we were about to enter into G20. Now as of Oct 2020 we have foreign reserves of only $12 billion and Pakistan’s outlook is not very promising either. Recently, we have heard lots of distressing news in relation to Pakistan. Like, FATF, Kashmir issue, internal and external relations of Pakistan, political situation and constantly rising inflation. The annual inflation rate rose to 9% in September 2020 from 8.2% in the previous month. These numerous issues have been quantified by a few research companies. According to the survey report done by IPSOS January 2020 for consumer confidence in Pakistan Economy, the top most worrying factors are unemployment, increased inflation, increased poverty and burden of additional taxes.
To circumvent these issues we have seen PDM (Pakistan Democratic Movement) which is fighting for the rights of common people and has clear stance of “vote ko izzat do”. As, they believe incompetent PTI government is a selected one by Establishment which has one distorted Pakistan’s international relations and is responsible for the downfall of Pakistan’s economy. Needless to say, Overseas Pakistanis are not advantaged in any way either who is the backbone of Pakistan’s economy. According to the survey report of IPSOS the consumer confidence index (CCI) was 55.97 in mid-2018 when people were overwhelmingly optimistic about Pakistan economy and were expecting real change (Tabdeli). So Pakistan index was above average but ever since the start of this Tabdeli tenure people confidence has shattered and we have hit the low index. Global consumer confidence index (GCCI) is 48.5 while Pakistan is sitting at 32.8.There have been other reports done by a few other research companies and they all vet Pakistan at the same level. Referring to a survey report done jointly by “Gallup” and “Dun & Bradstreet”, where the index is scored from 0 to 200 as 100 being an average Pakistan was recorded at pessimistic score of only 79.1 for August 2020 Survey.
From the survey reports it is evident that consumer confidence in 2020 is further reduced from 2019. One factor could be Covid-19 outbreak which itself has taken a toll on people psychology and hence there is a tendency for higher pessimism. The attention-grabbing point is that we see the largest slump in KP region where PTI had their government, the CCI index declined by 33%. 7% and 14% drop in Balochistan and Punjab respectively has been recorded. On contrary to this Sindh region shows a 10% surge in CCI index as compared to Feb Survey. Without a shadow of doubt and after analysing these reports it is evident that Pakistan needs to revise their economic policies. Corporate taxes have been reduced to entice foreign companies, but the geo-political situation of Pakistan is not very tempting and the recent episode of Pakistan being on FATF grey list adds to the further adversaries. The banking industry and external sector in Pakistan will have more direct negative effect of this.
On the other hand common people of Pakistan who are not well versed by the macro-economic situation of Pakistan are struggling to make both ends meet. The personal income tax rate which was stagnant for quite some time has been increased to 35 percent which has put an immense burden. The impact of this on workers and poor people is glaring, and more headcount would be pushed below the poverty line. According to World Bank the poverty in Pakistan fell from 64.3% in 2002 to 24.3% in 2015. But now the forecast figure reveals that Pakistan new base rate would be 33.5%. Pakistani Diaspora living abroad wants to settle down in Pakistan to serve their country but the uncertain situation and economic turmoil in Pakistan makes it very tough. The recent legislation passed in favour of people trying to invest in real estate has made a positive impact and we have seen a surge in the sector. But the rising real estate prices also attract speculators in a hope for making quick and safe return. As more speculators enter the market, the probability of instigating a bubble, and then a crash also increases. At the moment real estate market is perfect fit for tax haven, wealth concealment and legalizing your money. It will only benefit already rich people; poor people can’t even afford two times meal. The cost of living in Pakistan is too high at the moment hence, making repatriation to Pakistan extremely difficult. So the government of Pakistan is really should make the changes in the right direction. As, only 4% people have trust in current state of Pakistan economy on contrary, to 42% people who believe Pakistan has lost its sense of direction.
—The writer freelance columnist, based in London.
