Question

Keeping in view the historical trends analyze the current economic situation of Pakistan and highlight key challenges, major strengths, weakness, and the way forward.

Answer 1

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Question:

Answer:

Economic Outlook of Pakistan:

Indicator	2015	2016	2017	2018	2019
GDP(annual growth in %)	4.7	5.5	5.6	5.8	1
Unemployment (in %)	5.9	6	6	5.6	4.45
Inflation (CPI, %)	3.2	3.7	5.4	5.4	12.7
Fiscal deficit (% of GDP)	-5.3	-4.6	-5.8	-6.6	-8.9
Public debt (% of GDP)	61.8	65.5	65.1	70	83.7

Pakistan is developing asian country. Total population of Pakistan is 22 crore and have major population of muslim (97.6%) religion. Currently, 64 percent of the nation is younger than 30 and 29 percent of Pakistanis are between 15 and 29. Pakistan stands at 152nd position IN 189 countries in HDI. 24.3% of the population lives below the national poverty line in 2015.

We have seen above table all about the major economic indicators of Pakistan for last 5 years (from 2015 to 2019). According to the data the economic health of Pakistan is not good. GDP growth in 2019 was only 1%, inflation rate is very high and last year it was more than 12%. Fiscal deficit is very high and last year it was approx 9%. But in respect of unemployment it was far better than other indicators. Unemployment rate has reduced year by year and in last year it was 4.5%. Policy interest rate in Pakistan is very high and it was 12.25%, trade balance was -27.6% last year. international reserve has reduced yearly by year and last year it was $10 billion only. Industrial production and investment have also reduced year by year and it was -2.3% and -12.8% respectively last year.

Key challenges and weakness of Pakistan:

The key challenges of Pakistan is increasing GDP growth rate, reducing, control and stabilized inflation, reduce fiscal deficit. The reason behind the lower or slow growth rate of Pakistan is lower level of consumption, investment, government spending and net export. Last year consumption level growth was only 3% and Industrial production and investment have also reduced year by year and it was -2.3% and -12.8% respectively last year. Because of these things the aggregate demand is very low in Pakistan that has reduced the growth rate and have little scope for growth. Policy rate in Pakistan is also very high that is negatively affecting the demand of money in the economy and lower demand of money means lower level of consumption and investment.

Terrorism and unstable government and poor law and order are also a big challenge. Pakistan is a nursery of terrorism and democracy is Very weak there. Officers and administrators are very corrupt and law and order is worst. So, not only economic indicators, the social and political situation is also worst.

Major strengths of Pakistan:

The major strength of Pakistan is young population and lower level of unemployment. Total population of Pakistan is 22 crore and have major population of muslim (97.6%) religion. Currently, 64 percent of the nation is younger than 30 and 29 percent of Pakistanis are between 15 and 29. Lat year unemployment level was 4.45% that is reasonable. Other side Pakistan government also get financial aids and helps from the USA and china so, Pakistan has opportunity is to use these funds into economic activities.

How Pakistan do better:

Pakistan has lot of challenges and opportunism. Pakistan need to take some important actions on immediate basis to save the Pakistan and Pakistani economy. These actions taht is recommended by me are following as:

1. Need of social and political Stabilization and stabilized a strong democracy in the nation. Government should take a strict action terrorism and anti social activities. Government should also build a good and transparent long term relationship with the arm forces or military.

2. Government should increase spending and transfer and build a strong infrastructure within the country. It will helpful in increasing income level and making strong socio-economic infrastructure.

3. Government should increase aggregate demand in the economy. Policy rate is too high and need to reduce at reasonable that that will increase the demand of money and boost consumption and investment. Increasing demand will help to growing the economy fast.

4. Government have young population so, need to utilize it smartly through make him skilled.

5. Government should invite the global investment but it is possible if you have strong infrastructure, stable and transparent government and strong law and order. FDI will help to the economy and will increase productivity, employment level and income level that will increase aggregate demand and economic growth.

6. High inflation is also a big issue for the government. It is a cost-push inflation. So, government should also handle it smartly though increasing productivity, bi-lateral treaties and strong international political and economic relationship.

Thank You