Positioning Pakistan as a resilient and progressive economy on world stage

As the world braces for transformative economic shifts, Pakistan under the leadership of Prime Minister Shahbaz Sharif is strategically positioning itself to capitalize on these disruptions.

After experiencing economic turbulence post-2018 with declining GDP growth rates and a challenging investment climate, Pakistan is now showing signs of significant economic resilience and recovery as pointed out by the International Monetary Fund (IMF) as well as other multilateral agencies in their recent reports. The government has made substantial strides in improving the business environment. The World Bank’s Ease of Doing Business Index has reported significant improvements in Pakistan, especially in areas such as starting a business, dealing with construction permits, and trading across borders. For instance, the time required to start a business has been reduced from 20 days to 10 days, thanks to streamlined processes and enhanced digital interfaces.

The authorities have implemented several sector specific reforms in agriculture, manufacturing, services and Information Technology (IT) aimed at substituting imports and boosting exports. The agriculture sector, for example, has received a boost through a $500 million investment in modern irrigation and water management systems, aiming to increase agricultural productivity by 20 per cent over the next five years. Likewise, the government is promoting the adoption of advanced manufacturing technologies with incentives like a 15 per cent tax rebate for industries that upgrade to automation and robotics. This move is expected to increase manufacturing output by approximately 25 per cent by 2025.

The Information Technology has seen a great deal of increase in export of IT services. An investment of $200 million in technology parks and incubation centers is projected to triple the revenue of the IT sector to $5 billion annually by 2024. Many international companies like British American Tobacco (BAT) already have or are in the process consolidating their global Business Process Operations (BPO) in Pakistan. All these reform efforts are being complemented by bilateral and multilateral investments thanks to Pakistan’s renewed focus on economic diplomacy to reinforce the country’s strategic partnerships for foreign investment and economic growth. With the Shehbaz Sharif administration working to “monetize” investments done under the multi-billion-dollar China-Pakistan Economic Corridor (CPEC), the new phases in the CPEC projects are projected to bring in over $10 billion in investments by 2025, in energy, infrastructure, and technological cooperation.

The country’s relations with Saudi Arabia have also received a big boost recently and several agreements have been signed to increase bilateral trade from $3.7 billion in 2022 to over $5 billion by 2025. Saudi Arabia has also committed to investments in Pakistan’s renewable energy sector, estimated at $1.2 billion over the next three years. In addition, Riyadh plans large investments in agriculture, mining and mineral sector, and IT over the next few years. Apart from that, Islamabad is enhancing its role as a central hub in regional connectivity, leveraging its geographic location to facilitate energy and trade routes between Central Asia and South Asia. The development of the Gwadar Port, as part of CPEC, aims to increase cargo handling capacity from 1.5 million tons per annum to 10 million tons by 2026.

The budget reforms executed by the first Shehbaz Sharif government in June last year and the $3 billion loan agreement with the IMF have helped stabilise the nation’s declining economy over the last few months. The worst is already behind us. The current account is producing surplus, the foreign exchange reserves are going up and the exchange rate is stable despite a strong dollar, reflecting the resilience of the Pakistani economy. Inflation has come down from over 38 per cent in May last year to just above 17 per cent in April this year due to efforts of the State Bank and the government. The medium-term inflation is projected by the SBP to plunge to 5-7 per cent by the end of September next year, providing significant relief to businesses and common people. In conclusion, the economic policies and initiatives under Prime Minister Shahbaz Sharif are not only aimed at navigating the global economic disruptions but also positioning Pakistan as a resilient and progressive economy on the world stage. The strategic foresight and robust economic planning are setting up Pakistan for a sustainable and prosperous future.

 OMAR SAEED

— The writer is a financial analyst who can be reached at omar.saeed1971@yahoo.com

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