Dynamics of GDP growth in Pakistan

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Arsalan Ahmad

GDP growth rate which is widely accepted as the most reliable growth indicator across the world has been very volatile in case of Pakistan attaining peaks as high as over ten per cent and troughs as low as one per cent or less. The fundamentals of growth have never been stronger enough to provide economy of Pakistan with sustained pattern of growth, however, short patterns of support by the donors in the form of foreign aid or any other external stimuli as result of changes in geo-strategic dynamics have always kept Pakistan afloat.
Never could Pakistan maintain exceptional higher levels of growth for significantly longer period rather the pace of such higher levels have always been followed by or short circuited by unforeseen factors that include wars, insurgencies, instability, etc which resulted in receding the pace of growth maintained earlier. The 70-year economic history of Pakistan reveals an interesting relationship between such periods of exceptionally higher GDP growth and aforementioned factors especially the wars Pakistan has been dragged into in particular with her eastern neighbour. This relationship is indicative of an emerging pattern that has been repeated in almost all wars imposed on Pakistan.
No denying the fact that the decade of 60s is marked with very higher level of growth of more than six per cent on average and this is the decade which is also characterized with a war in the middle of the decade. Close observation of Pakistan’ GDP around that year shows that the average growth rate in preceding three years right before the war year has been close to or slightly over seven per cent (which is a remarkable achievement though), however, this marvellous performance was followed by war in 1965. It is interesting to note that comparing growth rates of Pakistan around all subsequent wars/conflicts bears relationship nearly the same as we find in 65 war. For example statistics show that before the year 1971, again the average growth rate was close to or above seven per cent in preceding three years to war.
The data from Pakistan Bureau of Statistics would show that in years 1962-63, 1963-64 and 1964-65, the growth rates were 7.19%, 6.48% and 9.38% respectively, the average rate for these years come around 7.68%. Likewise, the growth rates for years 1967-68, 1968-69 and 1969-70 are 6.79%, 6.49% and 9.79% respectively that brings the three-year average growth rate around 7.69% again. Now moving onto another conflict with India i.e. Siachen, which started in 1984, while tracing back the same growth trajectory, what we figure out is that Pakistan has been achieving growth rates of 6.4%, 7.56% and 6.79% respectively for the years 1980-81, 1981-82 and 1982-83 respectively, the average for which comes to around 7% again. Is this mere coincidence? Seems not, rather a cyclical trend seems to be in play.
This arises interest as to go ahead further and check wars in Afghanistan which have affected Pakistan deeply directly or indirectly. Following the former Soviet Union’ invasion of Afghanistan in December 1979, Pakistan became part of this war as frontline US ally from the early 80s. So the growth rates prevailing around that period show that in 1979-80, 1980-81 and 1981-82, these were at 7.33%, 6.40% and 7.56% respectively which again bring the average around 7% (though this period also overlaps somewhat with period of Siachen conflict). In the first decade of this century in years 2003-04 and 2004-05, the rate again went up beyond seven per cent but only for two years ie 7.7% and 7.52% respectively, however, the average for three years including year 2005-06 remained slightly below seven per cent threshold ie comes to around 6.9%, immediate following year was 2007 which has been one of the most troublesome years in Pakistan as declaration of war by Osama Bin Laden on Pakistan government, removal of the then Chief Justice, Lal Masjid, assassination of former Prime Minister and war on terror in the form of local insurgency are few of the incidents to mark high level of political instability.
Above facts depict that there is a conspicuous relationship between three-year average growth of around seven per cent and wars or insurgencies/instability Pakistan has been made victim to. Though every state including Pakistan strives for higher and higher levels of economic growth in order to raise standard of living of their people, however, in Pakistan’ case there seems to be an upper cap of around 7 per cent, informally though, which if sustained for some three-year period consecutively, may result in activating such external/internal forces that cannot let Pakistan to progress any further economically while high levels of instability and war(s) in particular are likely to be imposed on Pakistan and if history stands any guidance, it certainly carries immense significance and implications for policy makers both at economic and geo-strategic fronts.
—The writer is a freelance columnist, based in Islamabad.