By Prof. Engr. Zamir Ahmed Awan
Asian Development Outlook says Pakistan’s economy is expected to continue recovering in FY2022, supported by stronger private investment, improving business activity, a steady vaccine rollout and economic stimulus measures for FY2022.
Since the outbreak of COVID-19, in 2019, the global economy suffered heavily. Pakistan was also not any exception. Lockdown damaged the productivity of Pakistan, social distances have reduced the economic activities to a large extent.
However, as compared to the rest of the world, COVID’s impact on Pakistan was much less. It might be the right strategy of Pakistan to opt for smart lockdown, instead of complete lockdown. Another reason might be rich gene pool of Pakistan has resulted in improved internal immunity.
However, good crops and the right policies were contributing to the economy positively. But, external debt, inflation, price-hike of common commodities, etc. were on increase uninterruptedly. It harms the common man’s life. GDP growth, job creation, and exchange rate were the major setback to the national economy.
“Pakistan’s trade with Central Asian states, Russia, Afghanistan, Iran, and Turkey will improve having a positive impact on the Pakistani economy. Access to new markets will help Pakistan to overcome its foreign exchange reserves and dependency on borrowed money.“
The World Bank reported in its October 2021 Pakistan Development Update: Reviving Exports shows that the country’s real GDP growth rebounded to 3.5 percent in FY2021, after contracting by 0.5 percent in FY2020 with the onset of the global pandemic. In addition, inflation eased, the fiscal deficit improved to 7.3 percent of GDP, and the current account deficit shrunk to 0.6 percent of GDP – the lowest in a decade.
“With effective micro-lockdowns, record-high remittance inflows, and a supportive monetary policy, Pakistan’s economic growth rebounded in FY2021,” said Najy Benhassine, World Bank Country Director for Pakistan. “These measures, together with the expansion of the Ehsaas program and support to businesses, were key to strengthening the economy and recovering from the economic fallout associated with COVID-19.”
The Pakistan Development Update is a companion piece to the South Asia Economic Focus, a twice-a-year World Bank report that examines economic developments and prospects in the region and analyzes policy challenges faced by countries.
“With effective micro-lockdowns, record-high remittance inflows, and a supportive monetary policy, Pakistan’s economic growth rebounded in FY2021,” said Najy Benhassine, World Bank Country Director for Pakistan.”
The fall 2021 edition titled Shifting Gears: Digitization and Services-Led Development, showed that South Asia’s recovery continues as global demand rebounded and targeted containment measures helped minimize the economic impacts of the recent waves of COVID-19. But the recovery remains fragile and uneven, and most countries remain far from pre-pandemic trend levels.
Encouraging remarks by the Asian Developments Bank – Pakistan’s economic growth rebounded to 3.9% in fiscal year (FY) 2021 (ending 30 June 2021) and is expected to reach 4.0% in FY2022 as business activity gradually resumes in the second year of the coronavirus disease (COVID-19) pandemic, the Asian Development Bank (ADB) said in a report today.
According to the Asian Development Outlook (ADO) 2021 Update, ADB’s annual flagship economic publication, Pakistan’s economy is expected to continue recovering in FY2022, supported by stronger private investment, improving business activity, a steady vaccine rollout, and economic stimulus measures for FY2022. Yet, significant uncertainty clouds the economic outlook throughout the pandemic in Pakistan and worldwide.
“Pakistan’s economy is on the path to recovery, supported by promising growth in the industry and services sectors,” said ADB Country Director for Pakistan Yong Ye. “The continued rollout of the COVID-19 vaccination program, structural reforms, and the expansion of social protection programs are all key to ensuring inclusive and sustainable growth. Fiscal incentives and policies to boost export competitiveness, bolster the performance of the manufacturing sector, and augment private investment will continue to play an instrumental role in strengthening the economic outlook.”
Based on the state of the economy in 2021, we are optimistic that in the year 2022, the economy may improve a bit, but, a big jump is not expected. Pakistan’s agriculture sector may become more productive and will contribute more. Exports may enhance, as some of the non-traditional markets have been added to the list of Pakistan’s export market. China will import more from Pakistan.
“Pakistan’s economy is on the path to recovery, supported by promising growth in the industry and services sectors, said ADB Country Director for Pakistan Yong Ye.“
In fact, the Chinese government has formulated a friendly policy to import more from Pakistan, in a bid to support Pakistan and narrow down the trade gap. China will contribute more toward the economic development of Pakistan through its CPEC projects. Several projects are expected to be completed in 2022. Some new will be initiated in 2022. CPEC will be Oxygen to ailing Pakistani economy on the ventilator already.
China’s role in economic take-off will depend, how we engage China and how we deal with China. There is full support from the Chinese side to assist Pakistan in economic take-off. But, the Chinese role is only as a catalyst. If we do not work hard, and only expect, China will help, we might be living a fool’s paradise. The pre-requisite is our own intention to improve our economy. Our strategic planning and consistent hard work will enable us to be beneficiaries of Chinese assistance.
Pakistan’s trade with Central Asian states, Russia, Afghanistan, Iran, and Turkey will improve having a positive impact on the Pakistani economy. Access to new markets will help Pakistan to overcome its foreign exchange reserves and dependency on borrowed money.
It is expected that international aid and assistance to Afghanistan may open more opportunities for Pakistan to enhance economic activities. Afghanistan is a land lock country and depends on Pakistan for international trade, which might be an additional opportunity for Pakistan.
“It is expected that international aid and assistance to Afghanistan may open more opportunities for Pakistan to enhance economic activities. Afghanistan is a land lock country and depends on Pakistan for international trade, which might be an additional opportunity for Pakistan.“
However, Pakistan might face more sanctions and restrictions from the US and its allies. EU may also give a tough time, adversely impacting Pakistan’s economy. IMF may play a pivotal role for improve or collapse of Pakistan’s economy. If we bargain and negotiate well, IMF may be useful positively. If we fail to convince IMF and implement their terms and conditions, it might hurt Pakistan’s economy.
Although Pakistan possesses the full potential to take off economically, it requires reforms and the right policies. The political stability and improved law and order situation. Unfortunately, as we approach near elections, the opposition’s parties, usually intensify their attacks on the ruling party and spoil the political stability in the country.
This is all based on previous experience, and the same is expected this time too. The Government may focus only to counter opposition and spent its most of energy and time only on the political front, leaving less time and less priority on the economic front, which might be negative for our economy.
Unfortunately, Pakistan is facing internal as well as external pressures. Our economy is dependent on many factors, some of which are beyond our control. It is really, difficult to say something about Pakistan’s economy in 2022, in definite terms but, being an optimistic person, I am certain that right policies and hard work of our people will be fruitful. International experts are of positive opinion regarding the status of Pakistan’s economy and we believe that it will turn true.
The writer is sinologist (ex-diplomat), editor, analyst, non-resident fellow of Center for China and Globalization, NUST, Islamabad, Pakistan. He can be reached at firstname.lastname@example.org