The Asian Development Bank has released a report on Pakistan’s economy claiming that the country is facing many challenges including high inflation, and foreign exchange crisis, this is why the economic growth rate is expected to be only 0.6% this year.
According to the report of the Asian Development Bank, Pakistan can bounce back through macroeconomic and structural reforms if the IMF program remains on track, and with the continuation of the IMF program, the fiscal deficit is expected to decrease. According to ADB, industrial production will remain low due to strict monetary policy, and electricity/oil increasing prices whereas average inflation is predicted to double this fiscal year i.e. 27.5%.
The report states, “The reason for the decrease in the speed of economic development is last year’s disastrous flood, the increase in inflation, the current account deficit, political instability, and the foreign exchange crisis. The report predicts a growth rate of two percent in the financial year 2024, taking into account the restoration of economic stability, implementation of reforms, post-flood recovery, and improvement in internal political conditions.
Asian Development Bank Country Director for Pakistan Yong Yee believes, “Pakistan’s economy continues to face severe difficulties, while last year’s devastating floods have worsened the economic and financial difficulties. Yet thanks to resilience and a rapid return to stability with strong macroeconomic and structural reforms, Pakistan can bounce back quickly. ADB is committed to continue supporting Pakistan’s economic recovery and development projects”.
Asian Development Outlook April 2023 also argues that climate change is a serious challenge for Pakistan’s economic, social, and environmental development. It was mentioned in the ADB report that according to the Global Climate Risk (GCR) Index, Pakistan has been among the 10 most vulnerable countries in the world in the last two decades. Where extreme weather causes thousands of deaths, huge damage to local agriculture, infrastructure, and the economy.
The report predicts a continued slowdown in industrial growth in Pakistan during the financial year 2022-23, reflecting fiscal and monetary difficulties, significant depreciation of the local currency, and high oil and electricity prices. Average inflation is likely to more than double to 27.5 percent this fiscal year (2022- 2023), compared to 12.2 percent in the last fiscal year (2021- 2022). Inflation reached 25.4 percent in the first seven months of the fiscal year due to high energy prices, a weak currency value, supply disruptions due to floods, and a balance of payments crisis. As a net importer of oil and gas, Pakistan will continue to face strong inflationary pressures for the financial year 2023.
The Asian Development Bank has released the Energy Sector Outlook Report 2030, which states that Pakistan needs $ 155 billion of investment in the energy sector. The report states that the power sector is facing serious problems like circular debt, transmission and distribution problems, and in the absence of discoveries, the sector is dependent on imported fuel.
EAT News conducted a general survey of street people to get information that this economic crunch is affecting the common man.
Saleem Nawaz is 38 years old laborer from a remote area of the country, he works on daily wages in Rawalpindi (the twin city of Islamabad). When he was asked about the economic situation of the county he replied with simple words, “I do not understand the gimmicks of economy and numbers, but I do understand that life is getting difficult day by day. I am an unskilled laborer, who works on daily wages, sometimes it happens that the whole day we spend jobless. The county is passing through difficult times; people do not take the risk of further investment in construction. Even if we get any opportunity, wages are so low that it is difficult to fulfill basic needs. Most of the time we are starving with empty stomachs. I am living alone here; my family expects that I will earn enough for them but I fail to secure a handsome amount for my loved ones”.
A government school teacher talked to EAT News on the condition of anonymity, “I am a low-scale government servant, although every year the government increases our remuneration but this increment is in pennies while the inflation rate is augmenting in pounds. Each time when I go to the market for groceries, I find daily usage items like flour, milk, grains, sugar, tea, eggs, and meat become more expensive as compared to my last visit to the market”.
Arshad Khan, 35 years old resident of Islamabad, is a small vendor who sells fruit on his wooden cart in the streets of the city. EAT News talked to Arshad Khan about the current economic situation of the country. He replied, “I walk through the different areas of the city to sell the fruit, daily I have conversations with different people from different walks of life, believe me, everyone is disturbed due to economic conditions in the country. I, myself, worry about Pakistan and its people. I do not know how the economic team of the country is tackling the current situation. Some people say the current coalition government of PDM (Pakistan Democratic Movement) is losing its popularity due to unpopular decisions”.
On the other hand, the World Bank released its report regarding the obstacles to the development of the Pakistani economy. According to the report of the World Bank, Pakistan’s economy cannot develop without reforms in productivity. It is said in the report that harmonizing taxes across sectors can improve the economy, moreover, improvement in manufacturing and trade rather than real estate and eliminating anti-export attitudes will also help to boost the local economy.
Keeping in view the current political and economic scenario, Pakistan is passing through a very critical time of its history. Local and international economists are continuously suggesting the PDM has to take some solid, timely, and wise decisions to defuse the economic crunch, if not, the high inflation rate, unemployment, poor political situation, and law and order situation will damage the country irreparably and irreversibly.
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