The demise of the erstwhile USSR despite military might and the vulnerability of affluent Kuwait to external aggression depict how security and economy are interlinked. This has also discarded the old “Gun vs Butter” conflict and has stressed the need to achieve a balance between national security and economic viability.
During a recent visit to Pakistan, the IMF team has advised Pakistan to sustain the “hard-earned macroeconomic stability” while forecasting the country to be among the rapidly growing economies in coming years. Improved security climate is the most significant contributor to this impression besides investment in infrastructure, better energy supply, substantial middle class, fast urbanisation, 60 percent work age population and other growth supporting reforms. According to Standard & Poor, long-term view of Pakistan’s economy is ‘stable’. All this has prompted the experts to predict economic growth of 5.6 percent this year.
Global Terrorism Index has observed that since 2014, there is a substantial decline of terrorism-related violence in Pakistan that is the result of national concurrence on the issue. When terrorists raged inferno at APS Peshawar by killing 133 innocent children, the civil and military leadership forged consensus in launching Nation Action Plan in December 2014 that was efficiently supported by Zarb-e-Azb, the counter-terrorism military operation. National efforts to eliminate terrorism and extremism are bearing results that are witnessed in the considerable decline of terrorist incidents. Residual and latent elements are being destructed through the operation Raad-ul-Fasaad.
Pakistan should not be oblivious to grey areas. Growth is visible, but debts are still ballooning. There is considerable improvement in infrastructure and energy supply,but the current account balance is unfavourable
Therefore, Pakistan has started to gloss over its progress on the security front. Secure Pakistan is catching the eye of economic experts already. Daniel Runde has highlighted in Forbes magazine to look at Pakistan ‘beyond security lenses’. Expecting Pakistan to replicate Columbia’s success story, he suggests Pakistan, the sixth largest market of the world, to be accepted as a potential economic partner with its 200 million population, including 60 percent of working age, relative political stability, the fastest rate of urbanisation requiring food, energy, water and consumer goods. CPEC project of over $50 billion with railways, highways, oil and gas pipelines and deep-sea Gwadar port is also attracting many countries after the thaw in terror and violence.
The impact of bettered security on various segments of the economy is becoming evident. Early harvest CPEC projects of over $50 billionin energy and transportation infrastructure are maturing with productive results. In an article titled “Beyond the headlines of terrorism, Pakistan’s economy is on the rise”, the Washington Post has pointed to the policymakers of Trump administration that by lingering on the fading terror menace, US may miss the exceptional economic opportunity in Pakistan with its relative political stability, growing middle class and ameliorated security scenario.
Homi Kharas, a scholar of Brookings Institution, estimates that the consumer middle-class of Pakistan could reach theUS$1 trillion by 2030.DrIshrat Hussain has rightly observed that the robust middle class of Pakistan is responsible for 25 percent rate of return to the MNCs, in addition to a rise in the production of steel, cement and automobiles etc. This bullishness has urged the economic pundits to include Pakistan in the fast-growing economic category of VARP, i.e. Vietnam, Argentine, Romania and Pakistan. The VARP countries, while ensuring a rapid return to the investors, can boast of strong economic growth with their young middle class having powerful propensity to consume.
Further, Pakistan must capitalise the global transformation, whereby the economic dynamism is shuffling from the developed economies to the emerging markets. Advanced economies like European Union and America are getting hard-pressed with their ageing population, soaring debt and weakening financial institutions. This has led them to look forward to rising economies like Pakistan with CPEC investments, colossal consumer market, vastly improved security and other growth-friendly reforms.
However, we should not be oblivious to the grey areas. Growth is visible, but debts are still ballooning. There is considerable improvement in infrastructure and energy supply, but the current account balance is unfavourable. Tax to GDP ratio is critically low. Such disparities can hold back the economic momentum. Besides, all external attempts have to be thwarted that aim to dictate our security priorities, since we have linked our security options in line with our economic future. All challenges to the state’s writ have to be defeated. Consistent efforts must be ensured to maintain peace and stability in FATA and Karachi, the economic capital of Pakistan while doing away with the vulnerability of Baluchistan.
At this juncture, we can ill-afford any distraction on the prosperity path. Another smooth transition of power to a democratically elected government, increase in tax revenue and evolvement of fiscal discipline can enable the country to optimise economic dividends.
So, this balance in the interplay of economy and security ought to be preserved to achieve a sustained growth rate of 6-8 percent for several years from now. Our ceaseless effort and unflinching faith in the future may turn the prediction of Goldman Sachs, who coined BRICS, into reality for Pakistan being “set to become 18th largest global economy by GDP in 2050”.
The writer is Country Manager of JSC Subsidiary Bank NBP Kazakhstan (Foreign Subsidiary of National Bank of Pakistan)
Published in Daily Times, February 3rd 2018.