According to a World Bank report titled Global Economic Prospects, the official trade volume within the SAARC countries is less than 2 percent of their gross domestic product as export flows of the South Asian nations are highly concentrated with the European Union and United States. At least the one third of the world population lives in South Asia and economies in the region are also growing, but 2 percent official trade within the countries is not even at an average and this is because of political constraints and territorial conflicts. The countries in the region have adopted such internal and external policies in which a tension-free peaceful environment is not an option. Costly conflict, especially between Pakistan and India, has not only heavily cost the quality of life of common man but also has turned this part of in the world into one of the heavily militarized regionsand a nuclear zone. Defence budgets of Pakistan and India increase every year and no one knows where this trend will lead to.
According to the report, Pakistan and India have shifted their focus of exports towards East Asia and Sub-Saharan Africa in recent years without exploiting potential of trade in this region. Estimates put the unofficial Indian exports to Pakistan at $1.8 billion annually.However, both the countries have been trying to achieve fiscal stability for the last many years whereas the lower inflation has enabled the State Bank of Pakistan to cut policy rates to 40 years low. A stronger growth and investment is predicated in Pakistan after implementation of reforms aimed at strengthening business climate, improving security situation and easing energy constraints besides implementation of the China Pakistan Economic Corridor project. The report says that an average growth of the country has been projected at 5.5 percent for the next fiscal year. The country will also benefit from rising investments from China under the CPEC agreement, return of Iran to the international economic community and low oil prices in the international market.
China will make around $45 billion of investment until 2030 on the economic corridor which will connect Sinkiang province to the Gwadar while the initiative covers a series of transport infrastructure projects worth $11 billion and energy projects of $33 billion. The private sector will have lion share in the corridor and the associated projects. The corridor project has the potential to lift long-term growth while falling oil prices have improved the confidence of both investor and consumer.The policy reforms in Pakistan and India have reduced vulnerabilities.The government has already started operation in the troubled areas, including Karachi and it is hoped that peace and stability will bolster investors’ confidence in the country.
