Daily Times

The International Monetary Fund (IMF) said Pakistan has “moved further and further behind” its regional peers in terms of living standards, “underscoring the need for urgent policy correction”. The remarks from the Washington-based lender were mentioned in its staff report released on Thursday night. “Pakistan has been falling behind its peers in recent decades in terms of income per capita, competitiveness, and export performance. From 2000 to 2022, Pakistan’s GDP per capita grew at an average annual rate of only 1.9%. “By contrast, Pakistan’s peers achieved more than twice this rate: Bangladesh averaged growth of 4.5%, India reached 4.9%, Vietnam 5%, and China a growth of about 7.5%.” Compared to regional peers, Pakistan’s export growth has been weak, while its competitiveness has declined given an appreciated real exchange rate relative to productivity growth. The IMF noted that the “recent restoration of stability is an opportunity to implement reforms placing Pakistan on a path of sustained, inclusive, per capita economic growth with stronger export capacity”. Pakistan’s growth underperformance reflects weak contributions from human and physical capital and shrinking productivity, the lender said. “Economic growth during 2000-20 was mostly driven by physical capital accumulation and an increase in labor hours, with these factors contributing about 1.9 and 1.15% points per year, respectively. The IMF said that Pakistan’s declining export performance and limited openness to trade challenge the country’s development and external viability. “Beyond weak exports, Pakistan has struggled to innovate and develop production of more sophisticated export goods, as indicated by its low and declining share of knowledge-intensive exports,” the IMF noted.