By Kshvid News Desk with inputs from agencies
Pakistan’s economy always faced ups and downs due to the competitive market and its relationship with neighboring countries. The major players in Pakistan’s economy are America, China, and India. Pakistan’s relationship with China is always friendly, and china always supports Pakistan in times of need. America’s relationship was always demanding “To Do More.” India is the country with whom Pakistan’s relation could be fruitful in terms of the economy because both are sister countries with many issues. Kashmir is at the top of the list. The rivalry between them is the primary cause of the lower GDP of these countries as most of the country’s budget is consumed by the Military.
The start of Pakistan’s economy was under the supervision of Ayub Khan, who was also the first Militant Administrator of Pakistan. He presented a 10-year developmental Scheme for both agriculture and industrial units. Pakistan is an agricultural country, and most their economy mainly depends upon agriculture development. In the early days, Pakistan was rich in Jute, Rice, cotton, and Wheat production. Pakistan was considered as the Asian tiger, but then time played its turn, and Pakistan’s economy started declining because of political, social, and administrative issues. Zia’s five-year proposed five-year plan of the economy in which a target was set for the coming five years, and the government took essential steps to meet the target. The early day’s plans helped Pakistan’s economy to boast a bit, and development in different sectors was started. The plans were as follows. 1)Perspective plan 10 – 25 years, 2) Midterm plan 04 – 7 years, 3) Rolling plan 03 years, 4) Annual plans 01 years.
Pakistan’s economic performance outperforms many other developing countries, and the government has maintained a constant annual growth rate since independence. There have been several economic models in Pakistan’s history. Initially, Pakistan’s economy was based on private industry. Still, vital sectors such as financial services, manufacturing, and transportation were nationalized beginning in the early 1970s, making more changes during Zia ul-military Haq’s government in the 1980s. In particular, an “Islamic” economy was developed, which forbade Shariah (Muslim law) prohibited behaviors such as collecting interest on loans (rib) and imposed customary religious requirements such as zakat (tithe) and ushr (sacrifice) (land tax). Though many parts of the Islamic economy have survived (Overview, n.d.), the state began privatizing significant portions of the nationalized sector in the 1990s.
Following several economic restructuring measures, Pakistan’s economy is mixed, with state-owned companies accounting for a large percentage of its gross domestic product (GDP). The country’s economy, primarily agricultural when it earned independence, has become considerably more varied. Agriculture, no longer the dominant industry, contribute to around one-fifth of GDP while manufacturing accounts for roughly one-sixth. Trade and services, which account for the majority of the economy, have grown dramatically. Economically, Pakistan is more like the middle-income countries of East and Southeast Asia than the impoverished countries of the Indian subcontinent. Years of war, political upheaval, and low levels of foreign direct investment have all hindered Pakistan’s economic development. In addition, 21% of the population is deemed destitute. Pakistan’s negative trade balance has increased its deficit and depleted reserves. Year after year, imports surpass exports, resulting in a negative trade balance. Part of the reason for the country’s reliance on imports is that the infrastructure and industries in the country are underdeveloped, making development unfeasible (TRADING ECONOMICS, n.d.). Many sectors in this area have been state-owned for many years, resulting in inefficiency and poor revenues.
With the pandemic, the government has prioritized regulating COVID-19 infection waves, launching a mass vaccination campaign, expanding its cash distribution program, and ensuring favorable monetary circumstances to aid economic development. When confronted with the fourth COVID-19 wave, the government implemented micro-lockdowns, which successfully limited viral propagation while enabling economic activity to continue, lowering economic damage. Vaccination rates have been rising, but they remain low. As of September 2021, just approximately 12% of the whole population had received the recommended vaccinations. The current account deficit fell from 1.7 percent of GDP in FY20 to 0.6 percent in FY21, as large remittance inflows offset a more significant trade deficit. Foreign direct investment fell after the issuance of US$2.5 billion in Eurobonds, although portfolio inflows increased. The surplus on the balance of payments was 1.9 percent of GDP in FY21, and the official foreign exchange reserves at the end of the year reached US$18.7 billion, the highest level since January 2017 and equivalent to 3.4 months of total imports. Consequently, the rupee rose 5.8 percent against the US dollar during the fiscal year, resulting in an effective exchange rate of 10.4 percent.
According to the report, Pakistan’s gross external finance need will be $23.6 billion in 2021-22 and $28 billion in 2022-23. Despite the International Monetary Fund’s extremely conservative expectations, progress has been made (IMF). Pakistani authorities appear to be making a last-ditch effort to obtain a staff-level agreement with the IMF to overcome the gap in external funding requirements. According to a recent World Bank research, Pakistan has reached the top ten countries with the most foreign loans. Using the International Debt Statistics 2022, News International previously reported a “significant discrepancy” in the pace at which foreign debt is incurred in various DSSI-eligible states, including the group’s largest debtor, Pakistan (Focus Economics, n.d.). According to a World Bank report, Pakistan’s foreign debt increased by 8%, while another one from June this year stated that the Imran government borrowed $442 million from the World Bank. And per recent reports the overall GDP of Pakistan is less than the CEO od Tesla Elon Musk, richest man in the world. According to reports, the entrepreneur is close to touching $300 billion net worth very soon, making him the first person to do so.
Currently, his net worth is $292 billion. In drastic comparison, the GDP of Pakistan, which houses around 220 million people, is around $280 billion (at current market prices) in 2020-21, as per reports. This economical ups and downs are all part of Pakistan economy from 1947 till today.
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