Dismal statistics

While almost all developing economies are under pressure, Pakistan stands out with vulnerable statistics card

While almost all developing economies are under pressure, Pakistan stands out with a vulnerable statistics card. There are plenty of challenges as structural reforms have never seen the light of the day, and the wheel of the economy is mired with soaring sovereign debt, rapid depreciation of the rupee and a skyrocketing inflationary trend of up to 40%. They are likely to stay on and create more ripples at a time when growth is nosedived, and the purchasing power of the people is dipping to the core. As compared to other regional countries such as India, Bangladesh and Sri Lanka that have bounced back after the pandemic crunch, Pakistan is groping with severe problems as its budget deficit rises aplenty with each passing year and its tangibles of exports and production are plummeting.

The United Nations World Economic Situation and Prospects report for 2024 has added more alarming signs to Pakistan’s economy by saying it will continue to experience a modest GDP growth of 2% in 2024, and a slightly better 2.4% in 2025. The country incidentally was home to food insecurity during the year 2023, and import of grains and edibles despite being an agrarian society has come as a detrimental factor. Likewise, the textile sector which was profit-making in yesteryears has lost its market and clout, with inflated power prices making production uncompetitive for exports being one of the prime reasons. The enigma continues as smuggling, black-marketing and hoarding has pushed microeconomics at the edges.

The concerns expressed by the world body are worth attending. Prime among them are an unsustainable debt-servicing burden, accounting for 36.5% of the country’s GDP, and the debt-to-GDP ratio touching 89% in FY2022, compelling the central bank to stick to a record-high policy rate of 22% since June 2023. Last but not least is the rise in unemployment and a massive brain drain over the last several years. This decay can only be stemmed by ushering in political stability and opting for an out-of-the-box module of reforms.

Published in The Express Tribune, January 7^th, 2024.

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