Pakistan is a country which is facing devastating form of terrorism for two decades, deaths of many thousands of innocent people, hundreds of soldiers and a number of security officials. It has not only ruined the nation in the form of bloodshed but also ruined the fair image of Pakistan internationally.
Terrorism is considered as one of the biggest threats to the economy of the country. A decline in GDP growth, reduction in investment, lost exports, unemployment and the depreciation and inflation of incomes and exchange rates are the most affected areas of Pakistan’s economy. It has limited the Foreign Direct Investment (FDI) in the country as investors felt threatened to invest in this country. FDI is very crucial for the economic growth of Pakistan. It increases employments, strengthens industrial sector, improves balance of payment, finances development projects, improves foreign exchange reserves and in nut shell FDI is the main source to achieve high economic growth. Due to war against terrorism Pakistan is unable to attract more inflows of FDI.
Terrorism in Pakistan cost more than US $43 billion between 2001 and 2010. Foreign investment has declined from $1.4 Billion to $910.20 Million in FY 08-09. Due to decline in investment, poverty jumped from 37.5% to 41.4% in 2008-09. It has increased the expenses of the forces thus Pakistan has received total disbursement of $11,99 million from US under Coalition Support Fund (CSF) The price of security-related and civil relief operations, for instance, demonstrates the magnitude of terrorism’s direct costs: Pakistan has spent an additional US $4 billion or 2.4% of the average GDP since 2007.
Terrorism has also promoted smuggling along the porous borders. According to US-Pak Business Council Report (2009), Pakistan suffered a huge loss of $35 Billion due to Afghanistan’s instability. It has terribly damaged the infrastructure making the foreign and domestic trade impossible. Due to security issues the Tourism sector is in great loss. Due to terrorism, every year numbers of business minded people migrate to different European, American and many Central Asian countries in order to start their own business. This indirectly affects the industrial sector of the country.