Pakistan's economic outlook presents a mixed bag of challenges and opportunities, with the country still at a crossroads, grappling with inflation, fiscal deficits and external pressures, says a new report by the Asian Development Bank. But despite the concerns, the report also notes that the country has significant potential for growth and development if strategic measures are put into place.
The report, titled Asian Development Outlook, underscores that persistent inflationary pressure has plagued Pakistan's economy for several years, and while some of this is due to our own making, climate events and global supply chain disruptions have taken a heavy toll on the purchasing power of ordinary citizens.
Though inflation has declined, the impact it has had on consumer spending and overall economic stability is still visible, and any efforts to address these issues will be further hampered by the global economic turmoil caused by US President Donald Trump's nonsensical, mathematically- and geographically-challenged tariff policy.
Trump's policies also threaten any potential foreign direct investment, which is critical for stimulating growth in various sectors. Even the ADB notes that Pakistan needs to diversify its economic base, and no matter how conducive the domestic business environment, global economic turmoil usually scares potential investors.
And despite strong progress on IMF loan conditions, including fiscal and monetary reforms, the disorder in global markets threatens the government's ability to plan or borrow, placing additional stress on an underperforming area — tax revenue generation. Unfortunately, the recent past has shown that the government is still intent on using shortcuts, rather than meaningful policy reforms, to increase tax revenue.
However, amidst these challenges, there are also signs of hope. The potential for renewable energy, if realised, could lead to a sustainable long-term solution to the circular debt crisis in the power sector, while CPEC could still serve as a catalyst for growth, amid the realignment of global commerce.
COMMENTS
Comments are moderated and generally will be posted if they are on-topic and not abusive.
For more information, please see our Comments FAQ