As the world economies are passing through a transitionary period, the International Monetary Fund has projected new growth rates for the developed and emerging economies during the next two years. However, it has also warned the nations of worse scenario in one year after Trump administration takes over in the United States. The fund projects the global growth rate at 3.4 percent for 2017 and 3.6 percent for 2018, up from the overall growth projection of 3.1 percent in 2016. For Pakistan, it has projected the growth rate at 3.1 percent for 2017 and 3.5 percent for 2018. However, for 2017 the projection is 0.3percent less than the fund’s estimates issued in October 2016. In the meantime, Pakistan will continue to benefit from low oil prices in the international market which have fallen by 70 percent in recent years. According to the fund, the oil prices will gradually increase from an average $43 a barrel last year to $50 a barrel in 2017.
The world is already cautious about coming Trump administration which is apparently ready to open various fronts in many countries of the world. It is trying to introduce protectionism in the United States to safeguard the local industry, but the step will affect most of the economies of the world. The Trump administration is expected to start a showdown with China on the issue of South China Sea and with Pakistan on the behest of India and Afghanistan. The economists are not ruling out a new economic order in the world if the new US administration goes against traditional norms and diplomacy. The European Union is already warning the United States on various economic and political issues. In its report, the fund has also warned possible widening of imbalances due to restrictions on the global trade. The European Union has made a strategy to deal with the emerging situation while China has also warned the coming United States administration about its policy on South China Sea and Taiwan.
From the Pakistani perspective, there is a need to overhaul the entire tax system as well as trade and investment policies. So far, Pakistani entrepreneurs have concentrated on the traditional products which have good market within the country. However, Pakistan has the vast potential to enhance the exports of the traditional products. The element of research and development is missing in the industry and no effort has been made so far toward diversification of the products. Pakistan has vast market of its products in Middle East, Africa and South East Asia. What only needs to do is to concentrate on practical policies and not on cosmetic steps.
