Pakistan’s Macro Economy: Current Situation and the Way Forward
December 26, 2019
“Once macroeconomic stability is achieved and maintained, the next step is to resume the path for socially inclusive economic growth, job creation and poverty reduction.” This was stated by Dr. Ishrat Husain, Advisor to the Prime Minister on Institutional Reforms & Austerity, during his address at a Public Talk on ‘Pakistan’s Macro Economy: Current Situation and the Way Forward’. The event was organized by the Institute of Strategic Studies Islamabad (ISSI) today under its Distinguished Lecture Series. Policy makers, diplomats, academics and students were present on the occasion.
During his remarks, Dr. Ishrat Husain gave an overview of Pakistan’s current economic situation in the historical context. He said the for the first 4 decades after independence, Pakistan was among the fastest growing economies in the developing world, with a higher GDP and per capita income than its powerful neighbor India. But since 1990s, tables have turned. India and even Bangladesh have surpassed Pakistan not only in per capita income, GDP growth, HDI indicators, but has become one of the fastest growing economy in the world. He added that the main reason for this reversal in fortune is that Pakistan’s institutions of governance which brought about spectacular results in the first 40 years of its creation have decayed and become dysfunctional. Speaking about the current economic situation, he said that a question which needs answering is whether there has been an appetite for deep-rooted difficult reforms and political reforms and political ownership of these reforms?.
Dr. Husain said that the government is trying to improve the current economic situation through macroeconomic stability and its socio-economic uplift programs like Ehsaas. But the benefits to the common citizens would be gradually discernible, with resumption of socially inclusive economic growth. But for that, the state, civil society and markets need to work together.
Earlier, in his welcome remarks, Ambassador Aizaz Ahmad Chaudhry, Director General ISSI, welcomed the distinguished speaker and the guests and said that a sound economy is central to good governance and stability of a state. As a nation, we are earning less and spending more. Hence, we end up with high fiscal deficits. We are also familiar with the other deficit, the current account deficit – buying from abroad more than selling abroad.The present government has rightly accorded top priority to re-setting our economy.One recognizes that this is a heavy agenda. Stabilizing economy and pulling it out of such mammoth challenges is not easy, but, there is no short cut either.
Ambassador Khalid Mahmood, Chairman BOG, ISSI, in his concluding remarks stated that Dr. Ishrat Husain has articulated very well his views on Pakistan economy by giving an all-round picture of where it stands and the way forward. He added that the economy provided a contrasting picture while showing stability in the external sphere with decline in the current account deficit. But on the internal front, there is instability giving rise to high inflation, interest rates and middling gains in tax reforms. He added that fine tuning of the economy is required by the policy makers to expedite growth and hoped that in the future the situation will become better, especially for the marginalized part of the society.