According to a report by the Asian Development Bank, the economy of Pakistan will continue to grow by 4.5 percent during the current fiscal year ending June 2016 and by 4.8 percent for fiscal year 2016-17, thanks to macroeconomic stability, improvement in energy supply and investment in infrastructural projects, including China Pakistan Economic Corridor. The annual economic report says that higher foreign exchange reserves, lower oil prices and reforms will consolidate the macroeconomic sector. Though the overall investment climate has improved in the country, but the report warns that losses in public sector enterprises, shortage of energy and security concerns will continue to pose challenges for the economy. The country needs to carry out macroeconomic and structural reforms, particularly in revenue collection, energy sector and loss making public sector enterprises. Pakistan is still behind the emerging economies with regard to acceptable level of infrastructure which is prerequisite for economic growth. Therefore, the inadequate transportation connectivity, weak governance and low investment in key infrastructure projects are some of the challenges in the way of economic growth.
As a matter of fact, not only the ADP report but also studies from other organizations point out rudimentary flaws in the economics polices one of which is the rising cost doing business in the country. The current ADP report also blames the government for low investment in human development due to which the workforce lacksthe required skills which enable the country to enhance productivity and compete in the international job market. The government needs to implement reforms, improve power supply, increase fiscal space and create a competitive business environment. It adds that the construction and mining sectors as well as lower interest rates accelerated the growth in large-scale manufacturing to 3.9 percent in the first half of 2015-16 from 2.7 percent during the same period last year. The agriculture sector is likely to grow moderately as cotton output fell due to heavy rains last year.
The report says that livestock accounts for over half of the agricultural production and would moderately offset reductions else where in the sector. Inflation is also expected to remain within limits during the current fiscal year, but current account deficit could widen to 1.2percent of the gross domestic product during 2016-17. The report has probably been prepared before the current wave of terrorism that has marred the investment climate in the country. Whenever the people see a light at the end of tunnel, a disaster falls on earth. However, it is hoped that the government will continue to introduce structural reforms as well as the action against terrorists will also continue till its logical end.
