World Bank update on Pakistan’s economy

Full-throttled population growth will eventually cancel whatever economic progress we make, degrade environment and lead to a sharp decline in law and order

World Bank update on Pakistan’s economy


 

In a recently released development update on Pakistan, the World Bank has summarised the state of Pakistan's economy aptly, wisely and succinctly. The report is slick, well-written, and buttressed by all the right facts, figures and graphs. Even non-economists like me can read it. The report heaps praise on Pakistan's government where it should, and paints a realistic picture of the emerging challenges where it must. However, it ignores the ‘Basheeran’ factor. But first the report. For accuracy, I try to reproduce the report's assertions verbatim.

The report acknowledges that Pakistan's economy continues to grow strongly, emerging as one of the top performers in South Asia. Despite an uncertain global climate, Pakistan's economic growth is expected to accelerate to 5.2% in FY17 from 4.7% in FY16. Services, which comprise 59% of the economy, are expected to grow at a steady 5.6% in FY17.

Similarly, Inflation has remained within a tolerable range. Pakistan's investment-to-GDP ratio is expected to increase slightly in FY17 due to CPEC-related infrastructure projects. CPEC can unleash positive externalities over the short to medium term. Similarly, Pakistan's fiscal position has improved significantly over the past three years as the consolidated fiscal deficit (excluding grants) declined from 8.5% of GDP in FY13 to 4.6% in FY16.

The most remarkable story has been the stellar growth exhibited by Pakistan's equity market, with the benchmark KSE-100 Index growing 45.7% in 2016. This growth has occurred in part due to equity market reforms, including the integration of the country's three stock exchanges and improved governance and risk management.

So the World Bank's update is full of glowing remarks for Pakistan? Not exactly. The report issues numerous warnings that not all is well. Revenue growth is slowing, with the fiscal deficit growing for the first time in three years. Exports continue to fall as imports grow, substantially increasing the current account deficit. Investments rates - already low - fell further in FY16. The energy sector circular debt has resurfaced. There is a possibility that Pakistan may lose its impressive gains achieved over the past four years.

As the government nears four years in office, progress on reforms is slowing down. Privatisation efforts have stalled, and FBR performance in tax collection is below target, even after several years of strong performance. In Punjab, the province’s economy has struggled to create enough jobs for its growing young population

Some of the reasons for these emerging challenges are as follows. As the government nears four years in office, progress on reforms is slowing down. Privatisation efforts have stalled, and FBR performance in tax collection is below target, after several years of strong performance. In Punjab, the province's economy has struggled to create enough jobs for its growing young population. Whereas Vietnam, China and other South Asian countries have increased agricultural yields, Pakistan's agricultural sector has lagged behind. Even remittances have fallen by 2.3% in the first nine months of FY17.

To better understand what I have to say, I need to acquaint readers briefly with one of the oldest debates in social sciences: the question of qualitative versus quantitative approach to creating and testing knowledge. Broadly speaking, the qualitative approach is generally inductive in nature, is used to generate theories, and is not generalised to a certain population. The quantitative approach is exhibited in the World Bank's update; numbers are produced which are generalisable to the entire population of Pakistan.

However, at times even one point of data can lead to a new point of view. Take my own case. We were four brothers (one is a Shaheed) and we have six children amongst us. All six are studying in good schools. There is also a sweeperess in our house. She has around eight children and all are happily married. They have produced around 50 grand-children for her and I have calculated that in another 15 years this figure will reach 100. Most will remain illiterate.

My hypothesis is that for every educated child in Pakistan, at least five uneducated children are being produced. I also think that the proportion of the educated in Pakistan is actually falling. This full-throttled population growth will eventually cancel whatever progress we make, degrade environment and lead to a sharp decline in the law and order situation.

Has anyone thought about it?

 

The writer has a Master's in Sociology from Oxford