Pakistan has faced difficulties from the global economic downturn, high commodity prices, and trade frictions, which have hurt its exports and imports. Pakistan’s exports have been low and stagnant as a share of GDP, reflecting its lack of competitiveness and diversification in global markets. Pakistan’s imports have increased due to strong domestic demand and rising energy costs, leading to a large trade deficit and pressure on its currency. Pakistan has also been affected by the spillover effects of inflation and supply chain disruptions in other countries, which have raised its domestic prices and reduced its purchasing power.
Therefore, Pakistan’s economic growth hinges on how it can exploit the opportunities and overcome the risks from the global community. The report proposes some policy recommendations to enhance Pakistan’s export competitiveness, such as lowering tariffs, expanding export financing, enhancing market intelligence services, and improving productivity. It also stresses the need for structural reforms to improve governance, fiscal management, social protection, and human capital development. By following these policies, Pakistan can achieve more sustainable and inclusive growth in the long run.
The global community has had a mixed impact on Pakistan’s economic growth, providing both support and challenges to the country’s development prospects. On the positive side, Pakistan has benefited from the financial and policy assistance of multilateral institutions such as the World Bank, which has helped the country cope with the COVID-19 crisis and improve its macroeconomic stability.
Pakistan has also received high remittance inflows from its overseas workers, which have bolstered its foreign exchange position and domestic spending. Moreover, Pakistan has enhanced its strategic partnership with China through the China-Pakistan Economic Corridor (CPEC), which aims to improve its development in various sectors such as infrastructure, energy, industry and agriculture.
On the negative side, Pakistan has encountered difficulties from the global economic slowdown, high commodity prices, and trade tensions, which have affected its exports and imports. Pakistan’s exports have remained low and stagnant as a share of GDP, reflecting its lack of competitiveness and diversification in global markets. Pakistan’s imports have surged due to strong domestic demand and rising energy costs, resulting in a large trade deficit and pressure on its currency. Pakistan has also suffered from the spillover effects of inflation and supply chain disruptions in other countries, which have increased its domestic prices and eroded its purchasing power.
In addition, Pakistan has faced disappointments in attracting foreign investment and partnership programmes from other countries and institutions, which have backed out due to various reasons. For example, Pakistan’s investment policy allows 100% foreign ownership in most sectors without requiring local partners or stakeholders. However, this policy has not been enough to attract foreign investors who are discouraged by the country’s security situation, lengthy dispute resolution processes, poor intellectual property rights (IPR) enforcement, inconsistent taxation policies, and lack of harmonization of rules across Pakistan’s provinces.
Moreover, some foreign investors have faced political interference or legal hurdles in their projects, such as the Reko Diq copper-gold mine dispute with Australia’s Tethyan Copper Company or the Karkey rental power plant dispute with Turkey’s Karkey Karadeniz Elektrik Uretim. Furthermore, some foreign partners have withdrawn or reduced their involvement in CPEC projects due to concerns over debt sustainability, transparency, environmental impact, or security risks.
Therefore, Pakistan’s economic growth hinges on how it can exploit the opportunities and overcome the risks from the global community. The report proposes some policy recommendations to enhance Pakistan’s export competitiveness, such as lowering tariffs, expanding export financing, enhancing market intelligence services, and improving productivity.
Such situation also stresses the need for structural reforms to improve governance, fiscal management, social protection, and human capital development. It also advises Pakistan to improve its investment climate by addressing the concerns of foreign investors and partners and ensuring a level playing field for all stakeholders. By following these policies, Pakistan can achieve more sustainable and inclusive growth in the long run.