Stirrings of something positive

It is poorly-designed policies that are holding the economy back. We deserve better and we should demand better.

For an economy wracked by two devastating floods in a row, militancy, a debilitating energy crisis and an unresponsive government, any murmurs of good news are a welcome sign. The State Bank of Pakistan’s second quarterly report — one of the few regular reviews of the economy’s health — provided just that this week, when it stated that there were the beginnings on an economic recovery taking place, led by the agriculture, retail and financial services sectors. If this trend continues over time — and there is reason to suspect that it might — then that is indeed good news for the economy. Two of the three sectors identified are some of the biggest employers in the country, with agriculture accounting for about 45 per cent of the labour force and retail about another 10 per cent. Between the two of these, they account for a little over 40 per cent of the country’s gross domestic product. Growth in these sectors, despite all of the obstacles they face, suggests that there is a fundamental strength in the economy that is beginning to pick up steam. Unfortunately, it has to wrestle with a government that seems to consider its economic management responsibilities as an afterthought.

While the experiment of a government-managed economy failed catastrophically in Pakistan — as it did in other parts of the world — the government does nonetheless have a significant constructive role to play in nurturing economic growth. Principally this is to be done by providing an environment conducive for investment that includes fair rules and functional infrastructure. This is the very least that the country’s citizens should expect of their governments. This is something that the State Bank’s report notes almost every single time they review the state of the economy: that anything positive happening occurs despite the government, not because of it. And more often than not, it is poorly-designed policies that are holding the economy back and reducing its ability to deal with the many external shocks that are likely to hit it over the next few months. We deserve better and we should demand better.

Published in The Express Tribune, March 23^rd, 2012.