According to a report appearing in a British newspaper The Economist, those who visit Pakistan surprise to see a ‘strong business culture’ and a strong infrastructure network of ring roads and motorways across the country. The newspaper says that the country is mid-table in the World Bank’s ease-of-doing-business outperforming India under this head. In a recent article on the economy of Pakistan, The Economist says that the country has thriving stock market, a stable currency and low inflation, yet it is enjoying a rare period of optimism about its economy. The International Monetary Fund (IMF) predicts the economy will grow by 4.7 percent next year, the fastest rate in eight years whereas the consumer prices rises by 2.5 percent in the year to March, the smallest increase for more than a decade. The State Bank of Pakistan has lowered its benchmark interest rate twice in the year. Some economic indicators point to an upturn in spending as cement sales has risen by 5.5 percent from July to March and car sales rose by 22 percent over the same period of time.
A fall in the oil prices has brought a good slice of luck for the country as it heavily relies on oil for two-fifths of its power supply and is prone to periodic balance-of-payments crisis. The import bill can easily overwhelm the foreign-exchange earnings from textile sector and the remittances that Pakistanis send back home from the Middle East and Europe. In 2013-14, the country’s net import bill for oil was recorded at $12.6 billion, or around 5 percent of its gross domestic products. If oil prices stay low, Pakistan can save a total of $12 billion in the next three years, the paper says quoting the IMF sources. The money could be spent on things with more local content and give the economy a lift.
Though the government takes some credit of the economic stability in the country as it had stuck to an IMF programme, it is yet to be seen how the economy will react after this government completes its tenure. However, the foreign-exchange reserves became more than double to $17.7 billion a few months after the new government came to power in Pakistan. On one hand the government is taking credit of lowering the oil prices in the country and on the other hand it is making hue and cry that the falling oil prices have slashed the government taxes and duties. A more prudent policy is required to keep a balance between the import bills of oil and benefits the industry and common man reaps in the form of cheap electricity.
