Pakistan’s Misguided Economic Path

Our economic ideas and assumptions of progress are usually only based on hypothetical assumptions and speculations which only hold validity on theoretical basis but lack any application on practical basis. As a result, misguided obsessions and intense affiliations to political groups that claim to solve the economic crises are common. These ideals are found not only in commoners but in highly educated individuals and more shockingly in expert institutions like IMF and ADB.

During the first half of 2017, Pakistan’s economy seemed to have been flourishing. Political pundits highlighted speculative figures for economic statistics while ignoring actual data to prove that Pakistan was soon to have a boom which was to bring Pakistan out of poverty, craft a highly educated and healthy population and develop massive employment opportunities. One such case of these speculative figures is the stock market. In May 2017, the KSE-100 index hit a 52,256 points bar. Experts and government officials started praising the development but missed out a number of things.

It is seemingly important to understand that stock market has been a battlefield for a few top elite groups that can influence the index with movements of the shares. These movements, which they understand and manipulate help them making important investment decisions and bagging huge capital gains while the poor investors are left at the expense of unsurprising plunges in the market. At present, the speculative figures have gone all numb while the stock market stands at somewhere around 42,000 points, somewhat 10,000 points down from its peak. While the stock market boom was at its finest, international organizations and media groups were writing reports and articles praising how Pakistan was entering into the fastest growing economies in Asia and beyond. PSX was classified as the MSCI emerging market and IMF, ADB and other institutions were praising the infrastructural and economic development.

These figures and reports apparently strengthened the position of the then government of PML N but it is rather disturbing that some major economic phenomena are being completely ignored. The most important in this respect is the current balance of payment deficit of Pakistan. The current account deficit stands at $17.99 billion, something which has never seen in the past. From its start, Pakistan has majorly only relied on agro-industry which has low added value while it has been importing high added value electronics, steel, and automobile commodities. This has added to the deficit greatly. But the problem comes here. The current situation is even bleak. The industries like cement and textiles that were doing brilliantly are now seeing falling output and quality, therefore, losing value in global markets while being faced with high competition from Bangladesh, China, and India.

Other statistics are even more worrying. The social mobility rates have been falling constantly and so are wages as a percentage of GDP. In such a state, it is the 20% of the population in the lowest quadrant that faces the biggest hit i.e. the working class. In a Food and Agricultural Organization (FAO) report, it was found that the richest 20% in Pakistan consume about 5 times more food than the poorest 20%. In about 70 years of time, Pakistan has yet not been able to escape the famous “22 family control of the GDP” and the working class seems to be at a greater loss than ever.

It is evident in the world experience that organizations like IMF cannot be trusted. They have had a bad history of mishandling economies. Greece and Bolivia have been the most vivid examples. A more rational, practical and realistic approach is needed to address the economic crisis that is caused by the crony capitalism so that a system and an economy can be made that doesn’t just work for the rich 1% but the rest of the 99% too. As the elections draw closer, the hope seems to be fading more than ever. Apparently, no major political party is discussing macroeconomic management and the misguided obsession with infrastructure, transit systems and highly expensive power projects with low yields remain high.

You might also like More from author

Leave A Reply

Your email address will not be published.