Pakistan’s economy is turning corner

Masood-Khan-e1531231778133.jpg

Comment

Masood Khan

PAKISTAN economy is slowly
turning the corner. Multiple fac
tors are bringing about this change. Successful operations against terrorists, as well political and religious violence have enhanced confidence in Pakistan’s internal security and law and order apparatus. Last year, launch of the $46 billion China-Pakistan Economic Corridor (CPEC) sparked Pakistan’s economic growth. The CPEC has also positively influenced Western analytics about Pakistan’s economy.
Pakistan’s middle class has also been growing steadily which, according to some estimates, has crossed 80 million in a population of 200 million. Around 60 per cent of the population is in the working class category because of the country’s youth bulge. The number of people living below the poverty line went down from 34.4 per cent in 2002 to 12.4 per cent in 2011. Pakistan’s entrepreneurs and businessmen are becoming more skilled and self-confident. The Government has also been pursuing a largely productive reform programme with the IMF.
According to the latest World Bank’s Macroeconomic Outlook, Pakistan’s economy will grow by 4.5 per cent to 4.8 per cent in the next two years, with the expansion in industry and services. Investment will grow to 15.4 per cent of the GDP by 2017. There are forecasts that this year Pakistan may transition from a frontier economy to an emerging market. American magazine Forbes has called Pakistan the “next success story” and Bloomberg the “best undiscovered investment opportunity”.
Despite all these projections, we remain sceptical about Pakistan’s economic outlook. Caution is one thing; cynicism quite another. Caution will prepare us for future challenges; Cynicism will retard and immobilize us. A high-ranking Chinese Communist Party official, Li Jun, who visited Pakistan last week, assured his gloomy Pakistan interlocutors that if China could transform itself from one of the poorest countries in the late 1970s to the second largest in the world today, with a $11 trillion GDP, Pakistan too could tread a similar path with its $245 billion economy and proven advantages of location, resources and educated class.
We still have problems – serious problems – to surmount. Severe power shortages, as well as inadequate investment in human capital, science, technology and innovation hamper realization of our full potential. Despite the projected spurts in our growth, youth unemployment will remain high. Pakistan therefore needs to grow by 6 to 8 per cent to assimilate new, young entrants into the work force. Our exports remain dismally low at $24.5 billion, the bulk of which is primary commodities or minimally processed products, for a country as big as Pakistan.
Pakistan’s service sector is picking momentum, but its manufacturing has lagged behind. It is axiomatic that rapid development comes from industrialization and urbanization. Agriculture will continue to grow sluggishly because of low commodity prices in world market. The energy crunch hobbling our industry would be eased by CPEC’s early harvest projects forecast to mature by 2018-2020 and add estimated 10,000 MW to our national grid. Similarly, infrastructure projects under completion – highways, railway, ports, airports, and fibre optic connectivity – will create conditions for Pakistan’s rapid industrial growth.
To develop our economy to its full potential, first we have to believe in Pakistan’s economic future, not merely in an aspirational way, but as a practical reality. If we do not believe in our economic future, nobody else would. If the salesman is not sure of the product, the buyer would not be either. Our belief in Pakistan’s economic future should stem from data, trends, environment, and the decisions being made by the public and private sectors.
We also need to create Pakistan’s new, refurbished economic brand in the regional and international markets. This exercise should not be about verbal gimmickry or rhetorical flourishes, but about the substance of Pakistan’s economic strengths – a concept that captures the essence of how Pakistan’s growing economy will benefit our neighbourhood and global economy. In this context, we have to learn new ways of market integration and product innovation.
Pakistan knows and practices multilateral diplomacy quite effectively but mainly for issues relating to peace and security – the Jammu and Kashmir Dispute, Security Council reform, peacemaking, and human rights. So far, we have not critically leveraged economic diplomacy. In fact, we have not yet crossed even the first threshold of understanding what economic diplomacy is. Up to this day, we think it is about dealing with international financial institutions. Or at best it is about posting diplomatic officers to big capitals and sending periodic dispatches on economic and trade analysis. This is reporting, not diplomacy. An effective multilateral economic requires presence, representation, networking, selling Pakistani products and attracting investment. In this regard, we need to learn from China, Japan, Republic of Korea, India, Indonesia, Malaysia, Brazil, and Mexico, whose external, multilateral levers have played a decisive role in lifting their economies.
Finally, Pakistan’s strategy to use the strengths of its Diaspora community, numbering between 8 to 10 million, dates back to the 1970s. It needs to be updated to stimulate, upscale and incentivize start-ups, especially in the areas of venture capital, technology entrepreneurship, industrial plants, education, and medicine.
—The writer is Director General Institute of Foreign Relations Islamabad and a former Ambassador. He also worked in Pakistan Embassy in Washington from 1997 to 2002

Share this post

PinIt
    scroll to top