According to the international financial institutions and independent economists, the economy of Pakistan has the potentials to ensure annual growth rate ofup to 10 percent for next 30 years and no one would be able to stop the country from entering a middle or higher income group of countries.However, the Institute for Policy Reforms, in its half-yearly economic review, has expressed the apprehensions that the country would not be able to achieve GDP growth rate of 5.7 percent for fiscal year 2016-17.The report says that increase in the current account deficit has breached year’s target by 1.5 percent as exports are falling and their ratio with regard to the GDP is at a historic low. Pakistan is passing through a process of industrialization in the context of the proposed economic zones along the China Pakistan Economic Corridor, but the nation will have to prepare itself to absorb the light machine industry of China into Pakistan. The government is doing lip-service day and night about its plans and policies, but all the incentives and policies should have to be materialized in practical terms.
The government will have to offer comparative advantages to the Chinese investors who are willing to shift their light industry to Pakistan. On another note, the higher current account deficits in the absence of foreign direct investment could force the government to enter another loan programme with the International Monetary Fund. Payment of various external debts is also due which need befinanced by any source. The exports are falling, but the imports are on the rise despite the State Bank has imposed a condition of 100 percent cash margin on the import of consumer goods. The report from the Institute for Policy Reforms predicts that the fiscal deficit would exceed a target of 3.8 percent of the GDP. Inflation is, however, under control but the government will have to keep a check on it.
Pakistan is facing a hostile neighbor close to its borders which is also trying its best to cripple the national economy. It is tarnishing the soft image of Pakistan as a result of which the country could only attract a meagre investment of around 15 percent as compared to more than twice in India and one and half time by Vietnam. The desired level of foreign direct investment in Pakistan should be 20 percent of the gross domestic product, which should be $16 billion in terms of volume, annually.
