This is apropos a letter to the Editor carried by the newspaper yesterday. The writer is spot on, so to speak. Having said that, I would like to add to what the learned writer has said is that there is a need to recall that in recent years, Pakistan experienced impressive economic growth, reaching 6.2% in 2022 across various sectors including agriculture, large-scale manufacturing, real estate, and IT.
However, this growth was overshadowed by political uncertainty triggered by a no-confidence motion against the prime minister, followed by PTI (Pakistan Tehreek-e-Insaf) agitation that disrupted governance. These events contributed to a sharp decline in the value of the Pakistani rupee, imposed curbs on imports, and weakened production, consumption, and investment.
Additionally, devastating floods further compounded the challenges faced by the economy. This period of uncertainty persisted through coalition and interim governments, leading to an overall economic slowdown in fiscal year 2023 (ended 30 June 2023).
Achieving sustainable economic growth and proving the prediction of international financial institutions wrong is possible. Many other countries like South Korea, India and Ireland which had been facing the similar situation, but on the strength of competent leadership, applying innovative and creative macroeconomic and fiscal measures not only defied the predicted low GDP growth but surprised the world by achieving much higher economic growth.
South Korea faced severe economic challenges during the Asian Financial Crisis of 1997, including a sharp decline in GDP growth and currency devaluation. The IMF and World Bank initially predicted a slow recovery.
However, under the leadership of President Kim Dae-jung, South Korea implemented bold reforms, including corporate restructuring, financial sector reforms, and opening up to foreign investment. These measures helped South Korea recover faster than expected.
After the bounce back from the 1997 Asian financial crisis, the economy continued strong growth in 2000 with a GDP growth of 9.08%. In 1991, India faced a balance of payments crisis, and the IMF and World Bank projected low GDP growth.
The Indian government, led by Prime Minister Narasimha Rao and Finance Minister Manmohan Singh, implemented significant economic reforms, including liberalization of trade, deregulation, and opening up to foreign investment.
These reforms transformed India’s economy. Since then India has grown with an average growth rate of 7% and have become the world’s fifth largest economy valuing at $3.7 trillion in 2023 compared $ 266 billion in 1991, while its purchasing power parity increased from $1 trillion in 1991 to $13 trillion in 2023.
Ireland experienced a severe economic downturn during the 2008 global financial crisis, with IMF and World Bank projections indicating prolonged economic stagnation. The Irish government, under Brian Cowen, implemented a series of measures including fiscal consolidation, banking sector restructuring, and policies to attract foreign investment.
These efforts contributed to Ireland’s economic recovery, exceeding initial growth projections and since then over the past decade to 2022, Ireland’s economy recorded an average growth rate of 9.1%, which is above the 1.4% average for the Euro Area. Pakistan can also defeat these pessimistic predictions by proactive and innovative leadership and by adopting innovative, creative, and out-of-the-box solutions to achieve sustainable economic growth.
The key innovative strategies which have worked for other countries should also work for our country. These strategies include implementing comprehensive structural reforms to enhance business environment and labor market productivity, investing in education and healthcare to develop a skilled workforce, accelerating infrastructure development to address bottlenecks, promoting export-oriented industries to diversify exports and reduce reliance on imports, attracting foreign direct investment (FDI) through incentives and streamlined processes, fostering innovation and technology adoption, addressing governance challenges and corruption, prioritizing climate resilience and sustainability, strengthening social safety nets, and fostering political stability and consensus-building.
These efforts, supported by policymakers, business leaders, civil society, and international partners, can pave the way for sustained high economic growth, positioning Pakistan’s economy for long-term prosperity and resilience.
Qamar Bashir
Copyright Business Recorder, 2024
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