After the UN report and the World Bank forecast, now we have another subdued projection about Pakistan’s economic growth. The new forecast by the IMF does not present a rosy picture for Pakistan which it says is likely to show stalled growth of just 1.5 percent in the current fiscal year which is to conclude by the end of this quarter. Of course, the Covid-19 pandemic has a lot to do with this dismal forecast, as the World Bank has also put Pakistan’s revised growth estimates at just 1.3 percent. Interestingly, both the IMF and the World Bank appear to have a better understanding of Pakistan’s potential to perform than the government and the State Bank of Pakistan do, as both projected the growth target between two and three percent for the economy. It has become usual practice to set a target that can hardly be achieved, rather than being more realistic and present to the people of Pakistan the situation as it is. The contraction of the economy in 2020 when the pandemic was at its peak has taken a heavy toll.
However, we cannot simply blame it on the pandemic alone. It is more of a capacity issue that has marred the country’s economy for its third year running. The government has not been able to get hold of basic macroeconomic issues, with repeated alteration in its appointments and decisions in some key areas related to economy and finance. Take for example the current account deficit that has been a cause of concern with or without the pandemic. Much before the pandemic hit the country, the fiscal balance was also not being managed properly. Even more disturbing has been the government’s handling of spiraling inflation in the country; this was also badly affecting the people of Pakistan before the first case of the coronavirus was reported. There is a likelihood that the next fiscal may see some improved performance, but that will not happen on its own. Ideally the economy should grow by at least four to percent next year, but even if we achieve that uphill task there are other challenges that the government should take up with utmost seriousness.
Inflation is one such problem the government must tackle so that the people can heave a small sigh of relief. If inflation slows down the people will be able to spend some more on other necessities of life rather than just trying to manage their food and clothing. That in turn is likely to spur some more economic activities in other areas. The current account deficit is another beast to tame, if it keeps widening its maw it will eat up whatever little gain the economy will show. What the country needs at the moment is judicious economic policies coupled with effective financial management, and that the government can do only if it can assemble an efficient and expert team that has the people’s benefits at heart rather than other considerations. A steady economic expansion can give us some stability in the next couple of years. The country is desperately looking towards some better news than what the present forecasts and reports have given us.