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Pakistan’s Economy | Editorial

For a political party that considers economic development as its raison d’être, failure to meet its goal of attaining 5.5 percent gross domestic product (GDP) growth rate is cause for embarrassment. The Pakistan Muslim League-Nawaz (PML-N) was able to steer the government into attaining a GDP rate of 4.7 percent, which although higher than the previous GDP rate is still low. However, things are not as discouraging as they first appear to be as the industrial sector displayed a marked increase, with the growth rate being 6.8 percent while the services sector also showed modest improvement. The low GDP growth rate was the result of negative growth rate of 0.19 percent by the agriculture sector. While it is true that agriculture constitutes a significant part of Pakistan’s economy and negative growth rate in the sector must be addressed, however, a holistic appraisal of the economy would reveal that high rate of growth in the manufacturing sector is welcome news.

The industrial sector growth rate was largely due to the investment and development that took place in the construction industry and the power sector. The PML-N government is often criticised about prioritising construction of roads and elaborate infrastructure at the cost of development of health and education facilities. While there may be some weight behind these claims, it must be realised that health and education investment is not the panacea for Pakistan’s economic ills. Economic development requires adequate infrastructure to support it, and the PML-N government seems adamant on following this prescription. For most of Pakistan’s history, there have been low domestic savings but substantial foreign aid has found its way into Pakistan, and this has helped maintain a decent GDP growth rate. However, this foreign aid has been unable to address the underlying structural deficiencies, which have largely been responsible for Pakistan’s economic development. While it is true that the PML-N government is not exactly addressing all of these issues, it is still investing in infrastructure development and power generation, two of the main structural issues.

Pakistan’s power shortage is unequivocally the single biggest impediment to development in the recent past. Not only has it given great distress to the public, but it has also stagnated industrial development. Long hours of load shedding have made Pakistani exports, especially textile products, uncompetitive in the international market. It has increased costs by making the industrial units unproductive by decreasing their efficiency and forcing them to look for expensive alternatives for power provision. The PML-N government inherited this abysmal state of affairs, and the fact that it prioritised power production and managed to increase industrial growth rate is indeed laudable.

However, government should take note of the negative development in the agriculture sector. A great part of the labour force is still employed in agriculture, and in addition to providing them with means of livelihood, growth in the agriculture sector also keeps grain prices low and in turn keeps poverty in check. This does not mean that agriculture should be advanced at the cost of industrial sector. Pakistan’s economy is moving forward, and massive urbanisation has put great strain on the country’s major cities. This fast rate of urbanisation needs to be buttressed by industrial development if unemployment and poverty are to be effectively tackled. Hence, Pakistan is on the right track and it should continue developing the industrial sector.


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