I have once again thrust myself into the dirty end of the stick. Commenting on our economy can be a little nerve straining. I say this for two reasons; Pakistan’s macro and socioeconomic prospects have always been off colour, while the house of Sharifs seems ever ready to spread canards about how a terribly fleeced national economy would soon transform into a gazillion dollar miracle. With hardly any bets on the brain development of those in the dumper, it is easier for them to dodge the column and make mindless infrastructural schemes as their rallying cry for the next elections. Sharifs are quite dogged in the art of being economical with the truth. I may trigger a hornet’s nest, but truth be told, Pakistan’s economy would never take off given its present fiscal injuries.
Earlier this year, one of the big four accounting firms had prophesized that by 2050, Pakistan might surpass economic giants like Canada and Italy to become the planet’s 16th biggest economy. This jaw-dropping growth is largely attributed to a growing working-age population over the next 35 years. Trade harmony between emerging wealth creators like Brazil, India, China, Central Asia and parts of Africa will yield an increased demand for semi-skilled and skilled labour. Pakistan’s growing labour force will most likely help the resulting spillovers from globalisation support growth in the domestic economy. Linkages between cross-country financial markets would also increase, making Pakistan an attractive destination for free-flowing capital. As Richard Branson says, education and strong institutions are vital to creating a business climate, which will reap maximum gains through the new world economic order. While fresh GDP winds will pour in Pakistan, we, however, should not build castles in the air, as most of Pakistan’s present fleet of politicians are robbed of any serious vision to translate the growth binge into improved living standards.
Interestingly, the accountants were only optimistic for Pakistan, given it mended its structural constraints and got its house in order. Although they did foresee Pakistan scoring high in the long term, they also believed the state was struggling from one of the most repressed living conditions in the world. A fate worse than death; growth is good for nothing if it does not pull the socially fractured out of the dumps. Pakistan is a lame duck with a number of teething macroeconomic distortions. Without addressing them, it may never realise the true grass root benefits of the long-term economic activity, including long-running fiscal deficits and weak state-owned service delivery institutions.
Fiscal deficits have been a recurrent theme. Though gradually improving to 4.6 percent of GDP in the current fiscal year from 5.3 percent last year, it is still lumbering in a threatening zone. Creating free resources for the draught-ridden education sector is essential to convert Pakistan’s long-term drawing board prospects into something refreshingly visible. Due to the shortage of space, it might not be possible to talk at length about the disastrous impacts of our failure to control our loopy fiscal excesses on the country’s long-term prospects.
Weak public sector institutions are another gospel truth. Research suggests that strong state institutions lead to a climate of sustainable and useful macroeconomic growth. Poor service delivery in areas such as education, health, law and order, sanitation, waste management, uninterrupted utility supply and transportation, leads to a greater domestic inflation and inequality. Amid such fulminating state of affairs, the private sector often steps in to play the role of state institutions by investing in high-quality education, health, transport and better-equipped housing schemes. A minor section of fortunate households, endowed with passable levels of capital, flock to the private sector for refuge, while others see their already petty fortunes dwindling under the weight of domestic inflation. Therefore, reviving Pakistan’s institutions should pave the way for sustainable development in the longer term. Sadly, all major state-owned institutions of Pakistan are in the dock at present over their alleged unbounded malfeasance.
My assertions for Pakistan’s long-term macro and socioeconomic prosperity may fetch some flak from the corridors of power, but I am certainly not shooting in the dark. Opportunities, if not grabbed by the fist, will eventually cease to visit Pakistan. The present leadership, no matter how jaded or out of its depth, must realise that sustainable long-term macroeconomic development depends only on the provision of a facelift to the socially downgraded. The question remains: Will the government, already dead on its feet by rescuing its neck from the Panama sleuthing, bear such economic farsightedness? I can bet my bottom’s dollar that it would not.
The writer is an alumnus of the University of Cambridge and economist. He previously worked as a journalist in London and has also played for Pakistan’s Junior Cricket team.