The biggest challenges faced by our world have been the financial crisis of 2007-2008 and the ongoing coronavirus pandemic. While the former impacted the more modernized interconnected economies, the latter has wreaked havoc throughout the globe – and the impact of this is not limited to only one sector. The global health system has been rendered paralyzed in addressing this issue. However, as the more developed economies resume a semblance of normalcy following mass vaccination, countries in the Global South are still finding it hard to deal with the pandemic. However, Pakistan, bordering pandemic-ravaged India has miraculously thrived despite the pandemic. In a recent report, Forbes has stated that Pakistan’s economy is expected to grow at 4%. In this blog we will uncover all the many initiatives that led the process for the revival of Pakistan’s economy.
As per the Forbes’ report, this stabilizing or persistent growth in the economy is attributed to the expansion in the services sector which the magazine forecasts at 4.43% growth, in addition to agriculture at 2.77%, and industrial sector at 3.57%. These numbers seem promising, and can be directly linked to the timely and properly-chalked out plan by the government and its relevant bodies.
REVIVAL OF PAKISTAN ECONOMY
STABILIZING OF THE ECONOMY
The first thing Pakistan has been able to do is to introduce fiscal and monetary policy, in light of global economic disruptions. In review of the pandemic, the State Bank of Pakistan (SBP) kept its policy rate unchanged at 7%, and slashed its interest rate to 7% as well.
In addition to these policy measures, the Government of Pakistan injected an economic stimulus of 5% GDP to kickstart the economy, by introducing time-bound liquidity relief for borrowers, loan restructuring, as well as new and temporary refinance facilities to prevent layoffs (Rozgar scheme), support for health facilities, and promotion of investment (TERF). This has borne fruit as Pakistan’s debt to GDP ratio remained unchanged for this fiscal year as compared to other countries in the region.
Moreover, Prime Minister Imran Khan kept the economy afloat by not prolonging the extensive lockdown, and adopting a lifting of restrictions under a sector-wise approach. The first sector to experience a removal of restrictions was the construction sector. This was done in addition to the Construction Relief Package which paved the way for rapid activity in associated industries as well such as glass, cement, and steel. In addition to this, the SBP notes that an expansion has been observed in automobile, textile, food, and manufacturing sectors.