After long disorders, Pakistan has been able to template it’s economy made recent progress towards macroeconomic stabilization, but risks remain high and faster sustained growth will require substantial reforms. Pakistan’s population according to Census 2023 is 241,499,431.
Our GDP growth was 6.2% in FY 2022 followed with 2.4% in FY 2024. At the beginning of FY-24, Pakistan’s economy faced a potential economic crisis in shape of political uncertainty, fiscal and external imbalances, that led to pressures on domestic prices and foreign reserves. In order to preserve foreign reserves, the present regime has taken much appropriate measures to manage imports and capital outflows which have been disrupting local supply chains, economic activity that caused inflationary pressures on goods and services, therefore exchange rate flexibility has been restored and import controls have been relaxed. Above all substantive steps have been taken not only to contain the Current Account Deficit (CAD) but to convert it into surplus side and Pakistan is now successful to get CAD surplus of 729 Million Dollar. Political uncertainty also diminished with the successful conduct of the general elections and coupled with favorable weather conditions and easing external conditions, the economy began recovering in FY-24and consequently, growth of real GDP at factor cost is estimated to have risen to 2.5 percent in FY-24.The economic recovery over the years will require the steadfast implementation of desirable measures in fiscal and monitory policy.
Gross Domestic Product at current prices is based upon the GDP in national currency converted to U.S. dollars using market exchange rates. The GDP represents the total value of final goods and services produced during a year.
As the economic stabilization continues, macroeconomic risks remain high reflecting high financing needs, modest foreign exchange reserves, high debt and debt servicing costs, financial sector vulnerabilities, and a loss-making power sector that continues to affect public finances. Pakistan’s recovery is expected to continue, with real GDP growth expected to reach 2.8 percent in FY-25. However, despite Govt. efforts output growth is expected to remain below over the medium-term as tight macroeconomic policy, elevated inflation, are expected to continue to have impact upon economic activities. Faster growth in GDP needs to support living standards.
GDP Growth is projected to gradually recover with slow potential.
Economic recovery is expected to continue with real GDP growth of 2.8 % in FY-25, as the economy benefits from the availability of imported inputs, easing domestic supply chain disruptions and lower inflation. Business confidence will also improve with credit rating upgrades, reduced political uncertainty, and fiscal tightening measures, such as the devolvement of constitutionally mandated expenditures to the provinces and higher agricultural income taxes. However, with continued progress on reforms and macroeconomic stability, poverty reduction is expected to gradually resume. With high base effects and lower commodity prices, inflation rate has come down to 4.6% due to regulated domestic energy prices, expansionary open market operations, and new taxation measures?
Reforms in Power Sector
It is the high time, the reforms in Power sector particularly in power transmission and distribution must be chalked out and implemented, which will encourage the potential for better customer service, reduced line losses, improved management, increased efficiency and new investment, conducive government policies, strong political ownership, and active private sector participation.
Regulated Monitory & Fiscal Policy
The State Bank in order to encourage and boost up economic activities has regulated Interest Rate to 13%. This depicts that investors have instilled confidence in all planning and endeavors of the Govt. to promote exportable surplus to increase exports and contain undue imports. Hopefully credits from financial institutions will be cheaper and attractive which will cause decrease in cost of production and cost of doing business. Foreign remittances will encourage creating conducive environment for production. Regarding Fiscal Policy, Govt. is taking radical action against Non-Filers by tightening surveillance of their businesses to bring them into tax net. In order to rationalize the Fiscal Policy, the Govt. should focus upon progressive and proportional taxes rather than to implement only indirect taxes upon everybody.
Eradication of Malediction of Masses Beggars in Pakistan
According to a survey, about 4 crore out of 24crore persons in Pakistan are surviving their livelihood from begging and allied supplications. This is badly damaging economic activities and decreasing GDP of the country by millions of dollars. Govt. must take remedial and stern action to eradicate the curse of begging in the country. It will greatly help national economy to increase GDP by millions of dollars, when about 4 crore beggars are brought into the net of economic activities.
Challenging Economic Environment with IMF Extended Fund Facility (IMF-EFF)And Need to Synchronize Govt. Efforts By Political Stability.
The IMF-EFF program to remaining on track and to get additional external financing inflows, the Government continues to face a challenging economic environment while maintaining progress towards macroeconomic stabilization and critical structural reforms. Continued fiscal tightening will suppress aggregate demand, income, employment, and poverty alleviation. Currently, the Pakistani economy is plagued with high inflation rates, trade deficits, and debt. There are already good economic policies of present regime in place to rectify these problems, and to chalk out proposed solutions, which will determine the trends and future predictions of the economy. The ongoing Govt. efforts to capitalize the strengths and opportunities and to minimize weaknesses and threats for economic development of the country are really commendable. The need of the time is to ensure political stability and eradication of terrorism by taking all political stake holders on board to achieve sustainable economic development.
