Positive Economic Indicators By Malik Muhammad Ashraf
Foreign Direct Investment (FDI) and increase in exports not only act as strong catalysts in reviving sagging economies like Pakistan but also play a pivotal role in putting it on the path of sustained economic development. The flow of FDI in a country reflects the confidence of investors in the process of revival of the economy besides creation of jobs through the projects initiated under it. The increase in exports brings the precious foreign exchange in the country to finance vital imports. It also triggers the process of industrial development leading to enhancement in the job opportunities.
As far as DFI in Pakistan is concerned countries like China, Saudi Arabia, UAE, and Qatar have made commitments to invest in Pakistan. Last month Chinese Prime Minister Li Qiang paid a four-day visit to Pakistan during which 13 MOUs were signed to fortify cooperation in security, education, agriculture, human resource development, and science and technology besides expression of commitment to the high-quality development of the second phase of CPEC. The Chinese Premier also virtually inaugurated Gawadar Airport and noted that it was a critical step in building Gawadar into a regional hub of connectivity.
A 135-member Saudi delegation headed by Saudi Minister for Investment Khalid Bin Abdul Aziz Al-falih also visited Pakistan. A number of MOUs and Agreements for Saudi investment in Pakistan to the tune of $2.2 billion were signed. That commitment however has been increased to $ 2.8 billion during Prime Minister Shahbaz Sharif’s recent visit to the Kingdom. This is in addition to $ 5 billion investment already promised by Crown Prince Salman Bin Abdul Aziz during the previous visit of the PM to Saudi Arabia. In May this year President of UAE also announced to make $ 10 billion investment in Pakistan in multiple sectors of the economy. During the recent visit to Qatar by Prime Minister Shahbaz Sharif the Gulf State has also committed to make $3 billion investment in Pakistan. It is pertinent to mention here that the pledges for investment from Saudi Arabia, UAE, and Qatar are a sequel to the efforts made from the platform of SIFC. Prime Minister told the cabinet on Monday that Azerbaijan has also agreed to invest $ 2 billion in Pakistan. The other vital development has been the agreement with the IMF for a loan facility amounting $ 7 billion.
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One thing needs to be understood the commitments for investments by these countries are based on their assessments in regards to reversal of the downward trend in the Pakistan economy and the prospects of continuation of this process of consolidation. This success story is corroborated by the fact that inflation has fallen to below seven percent; interest rates are declining and the State Bank of Pakistan has now brought the policy rate down to 15% from 17.7 %; remittances have registered encouraging enhancement, foreign exchange reserves have crossed the $ 10 billion mark and the stock market is breaking records as 100 index for the first time has gone beyond 91000 mark and exports have witnessed 7.82% increase in the first three months climbing up to $ 7.495 billion as compared to $ 6.952 billion during the same period.
According to the data released by Pakistan Bureau of Statistics footwear exports were recorded at $ 45.136 million in the first quarter of this year as compared to $ 41.192 million during the same period last year. Pakistan and Uzbekistan also signed a $1 billion deal to increase bilateral trade in 2023 and they are set to explore different avenues in the ensuing meeting of the Joint Ministerial Commission to maximize the benefits of this bilateral trade agreement.
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The impact of this revival process for which the credit indeed goes to the incumbent government has also led to other positive developments in the industrial sector. Pakistan ‘s largest independent power producer Hub Power Company Ltd Is expanding into lithium mining, battery manufacturing and electric vehicle (EV) production under the SIFC. The Lithium exploration and battery production project is anticipated to be completed within 12 to 18 months catering to the growing demand for rechargeable batteries used in mobile phones, laptops and automobiles. An Industrial park is being developed over 15000 Acres on Pakistan Steel Mills land. It is one of the nine special economic zones being developed throughout the country under CPEC.
The foregoing are irrefutable facts on which the international lending and rating agencies have also based their assessment of the current state of Pakistan economy and the likely rate of GDP growth.
The World Bank expects Pakistan’s economic recovery to continue, with GDP growth reaching 2.8 per cent in FY25, driven by the lifting of import restrictions and lower inflation. Business confidence is expected to improve following recent credit rating upgrades, the continuation of the IMF-EFF programme, reduced political uncertainty, and the implementation of fiscal reforms such as devolving constitutionally mandated expenditures to the provinces.
IMF also has similar views on the present state of Pakistan economy. Its Resident Chief in Pakistan Esther Perez Ruiz speaking at a discussion organized by Sustainable Development Policy Institute Islamabad recently said ”The post-Standby Arrangement in July 2023, the confidence in policymaking has improved with inflation plummeting to its lowest level in three years, international reserves more than doubling and the economy on the course of improvement. Pakistan has managed to revive economic and financial stability over the past fiscal year despite the challenging external environment and destructive impacts of the 2022 floods”
Positive Economic Indicators By Malik Muhammad Ashraf
Source: https://www.nation.com.pk/08-Nov-2024/positive-economic-indicators