The 4U’s of Pakistan’s Economy

Pakistan has inherited a miserable economy since its inception. It has adopted different sets of operations from classical capitalism to mixed economic initiatives therefore; it faced huge losses from down trends of growth. Pakistan’s economy is unsustainable, unstable, uncertain and unfair. Throughout the period of 1990 to 2015 its economic status haven’t beckon stability but presenting the disturbing pictures of stagnation. While, showing parochial nature of growth with abject and erratic variations, it has impacted the sovereignty of state at large. However, Gross Domestic product (GDP) is still unstable as that of past. It is estimated that core of the economy of Pakistan is concerned with commodity producing sectors, manufacturing and agriculture. If the functioning sectors cannot present the growing value than the legs of economy are in crippling stage as along. Moreover, major sectors from where the estimation of economic condition can be judged such as large-scale manufacturing, major crops, and minor crops are unstable. These areas provide inclusive output, employment and exports to the stability of state. Firstly, average growth rate from past had caused unstable dramas of ups and downs either it’s about industrial boosts or agricultural concerns. According to the statistical data, the investment over the relevant infrastructure has been grounded which has severely impact the rate of productivity. Secondly, lowering fixed capital formation in both manufacturing and agriculture sectors had been proved heinous for economy. Furthermore, unstable, and unsustainable performance in agriculture substantially proffered the unproductive value over industry. Major crops such as Wheat, sugarcane, cotton encompassing other crop sectors has demonstrated unwavering growth patterns in initial period but later on these even shown less than 4 per cent rate. Variations from 1990 to 2015 have impacted these statistical figures of economy. While, minor crops like mango, banana, almond, apricot and rapeseed are shunned in low growth patterns. This has resoundingly affected the profile of both minor and major crops at large. Moreover, manufacturing sector had been representing more than fifteen industrial aspects with less estimation. However, products like varnishes, paints and few others have exhibited the double and stable digit of growth in past. And net outliers have impacted anxiously over-all. Pakistan on the other hand considered as consumer state. With this thought it has used the electricity for industrial, commercial or for household purpose at significant pace. Reluctantly, this shown alarming utilization of energy.

Furthermore, external debts have been the major curse to spinal-cord of the economy. However, such problematic debts are due to increased expenditures over revenue or income. Debts are smudged problems entangled with exports, services, revenue and imports. Undoubtedly, imports have overturned with exports while creating the phenomenon of trade deficit. Products for imports in major concerns are like chemicals, petroleum and machinery. Initially, during period of 1947 to 1977, it was recognized as development state. Every state system either capitalist or socialist was concerned with political legitimacy to its development. And later come the period of 1977-88 where the state of has faced heinous draw backs because of undemocratic involvement in others affairs. Country had registered deficit of 1.85 billion dollars in FY2021. This is mainly concerned with record imports in especially in the form of oil and vaccine arrivals. This created disparity between status of surplus and deficit and due to this current account deficit of state fell to 0.6 percent. Exports of goods lack in quality and no progress to maintain such quality, with this line of export have remained same. Moreover, in current stage it is touching 25,630 million dollars. Earlier the current account deficit remained 4,449 million and reason behind this was the unilateral transfer. Current account deficit has been influenced by negative growth of balance of trade. It has been expanded up to 33% with more ratio of import as compare export. Imports in 2021 have jumped with 23% with pace having severe ramifications as compare earlier.  Imports of consumers’ goods and finished goods are in rise in 2021 because earlier it was considered as pandemic has affected level of imports. Moreover, with imbalance in exports and remittances the current account deficit is also influence through this.

Remittances from workers outside the country shows growth track for secondary income. Such workers are indulged in improving the circumstances of good remittances. Meanwhile, this has surely impacted the growth rate.  Furthermore, investment either Foreign Direct or portfolio has been reduced in 2021 due to certain unpredictable conditions at domestic level. Rise in instability and political uncertainty have drastically affected to capital account balance for year 2021. Trade deficit remained at level of 28 billion as compare 21 billion dollars of FY20. Therefore, overall import and export touched 50 million and released the unprecedented pressure on rise of imports.

Meanwhile, the ramifications of irregular growth are enhancing the Balance of trade deficit, structural problems posing undesirable results, economic infrastructure losses, and most importantly economic capacity is being compromised. Moreover, non-commodity sectors such as real estate’s are cause of no strengthening economy. Such trends have been substantial loss for economy which demonstrates the hot air balloon effect. Further, sluggish speed of growth seems to impact poor people in general. Policy-prescriptions in the form of suggestions are inevitable need of the hour. Firstly, structural changes desperately implemented to adjust the status. Secondly, lowering the gap of rupee or dollar needs to be revisited with substantial steps of research and development to increase the exports over imports. Thirdly, certain revenue measures in the form of reduction in taxes with reforms in taxation mechanism. Fourthly, expenditures either of government oriented or individual related should be minimized so to level the revenue at times. Fifthly, there should be limitations on imports of products and domestication of own products ought to be the priority. Promotion of exporting products must be the priority and so on and so forth.

Khaleeque Ahmed
Khaleeque Ahmed
Mphil student at Quaid i azam university, Islamabad.