Is there any economic recovery plan on cards?
Not really. Is anyone asking for it? Not really. Is there any accountability for inaction? Not really. Would we stay victims of the status quo? Absolutely yes!
The country has such a sad but usual state of affairs. Of course, the news about the annual budget exercise and the IMF package have faded out or been taken over by other issues. This, however, does not mean that the economic situation has improved or any concrete steps have been taken for recovery and reforms, unless it is happening off the radar.
Pakistan's economic landscape has been characterised by a series of challenges that have necessitated a robust and multifaceted recovery plan. This is essential not only from a purely economic perspective but also to mitigate the social and political challenges, as most of these emanate from economic deprivation and marginalisation. The societal frustration has clear causal linkages with economic slowdown. The closure of industrial sectors, be they large, medium or small, shrinking job market, increasing cost of doing business and continued disintegration from global goods and services markets are extremely worrying factors, only if one is cognizant of these and grows over merely managing the public debt.
On and off, one hears slogans such as tripling exports in three years, some new industrial or export zones, billions of dollars in anticipated investments, and new long-term visions and plans. If we collate all of these claims, then we must have either already been or be the most advanced economy of the world fairly soon. However, if we check the authenticity, practicality and follow up, then we may need an additional legal system to punish these dream sellers.
Is there anything at all that is realistic, practical, feasible, transparent, traceable for progress and being implemented in the context of economic recovery? Is it the aforementioned political claims, endless meetings on so-called rightsizing of the government, privatisation or claims for increasing exports?
Is there anything in addition to negotiations with the IMF, issuances of bonds and debt instruments, increasing utility prices in the name of economic rationalisation but increasing subsidies for darling sectors and taking eyes off the billions of rupees in loan write-offs and similar white-collar scams? There is a lot to do and it is necessary. Are there any ideas, schemes or plans to increase production, productivity and employment in agriculture, manufacturing and services? Is there any market intervention to enhance the availability of land, labour, capital and entrepreneurship?
Are we providing incentives for mainstreaming the adoption of new technologies? Is there any monitoring or evaluation mechanism, for results of any actions, in place? Have we ever thought of improving rural livelihoods and finding economic models that support the localised generation of economic activities rather than burdening urban centres unnecessarily?
Have we taken any major steps towards inclusive and sustainable economic development? What is being done to restore the confidence of the general public and economic actors?
Not all is bleak. There are many glimpses of hope, only if one ponders. Pakistan presents a range of long-term business opportunities across various sectors due to its strategic location, a large and youthful population and ongoing economic reforms. In the agriculture sector, Pakistan has seen a robust growth of over 6% in fiscal year 2024, with significant increases in the production of key crops like cotton, rice and wheat. This sector, contributing about 24% to the gross domestic product (GDP), remains a cornerstone of the economy and offers opportunities in agribusiness and food processing.
The industrial sector, accounting for approximately 20.42% of the GDP, is diversified with textiles, garments and sports goods being notable export items. The services sector, particularly IT and telecommunications, financial services and retail, has emerged as a significant contributor to the GDP, reflecting global trends where services drive economic growth.
With over half of the contribution to the GDP coming from services, this sector offers a vast potential for foreign investment in areas like fintech, e-commerce and digital services.
However, there are challenges that need to be addressed to fully capitalise on these opportunities. Structural issues such as regulatory barriers, corruption, inadequate infrastructure and political instability pose risks to sustained growth and investment.
Entrepreneurs also face difficulties such as limited access to credit, a shortage of skilled labour and security concerns. Addressing these challenges is crucial for ensuring a conducive environment for business and investment.
By harnessing the opportunities, a sustained medium-term recovery will require a prudent macroeconomic policy mix coupled with reforms to improve the quality of expenditures, broaden the tax base, address regulatory constraints to private sector activity, reduce state presence in the economy, address challenges in the energy sector and increase public investments to improve human development outcomes.
Pakistan's economic recovery plan must be multifaceted, addressing immediate macroeconomic challenges while laying the groundwork for long-term structural reforms.
Focus should be on improving stakeholders' confidence, fiscal management, broadening the tax base, enhancing the performance of SOEs and investing in human development. International support plays a crucial role in stabilising the economy and setting the stage for sustainable growth and poverty reduction.
The implementation of these reforms will be critical to achieving a resilient and inclusive economic recovery. We may have been witnessing a decline in natural and productive resources, productivity, investments and entrepreneurship, but the fastest decline is the shift from care and sympathy towards apathy, by decision-makers and the general public alike. This is the most prominent and harmful in the management of economy, however, to whom one can point out when everyone is indifferent.
To reform the economy, it is imperative to reform the mindset and accountability, including inactions, mechanisms. Alas, both seem unlikely in the near future.
The writer is an international economist