The Story Of Pakistan’s Economy – OpEd

Pakistan’s economy has been ailing with structural imbalances, pressures from external debt and energy crises, and the country is moving slowly but surely through incremental and crucial reforms for stabilization and economic growth.

Recent developments across sectors—from energy and infrastructure to digital innovation and industrial expansion—reflect a cautiously optimistic trajectory. Though ongoing struggles, strategic partnerships, realignment of policies as well as international investments are propelling the economy forward. Below are key advancements in Pakistan economic landscape.

Pakistan has an ambition to set up 10,000 EV charging stations by 2030 which is a sea change towards sustainable transportation. Indeed, the government’s National Electric Vehicle Policy, along with the Special Investment Facilitation Council (SIFC), has already acted swiftly: slashing 44% off EV stations electricity tariffs, allocating 90 million for infrastructure and attracting landmark 350 million from China’s ADM Group to set up an EV manufacturing plant. These markers point to Pakistan’s intention to sync with global de-carbonization trends and shun fossil fuels as foreign capital is lured. At least, for context, EV adoption could reduce oil imports, easing foreign reserves pressure, by $2 billion annually by 2030.

Modest gains from stringent fiscal consolidation and monetary tightening on IMF programs revises the World Bank’s GDP forecast of 2.8% for FY24 from 2.3%. The question is, while this 0.5% is insignificant, it suggests stabilization efforts including reduced deficits and tame inflation (down to 23% in May 2024 from 38% in 2023). However, the hurdles remain such as low tax to GDP ratio (only 9%) and low exports ($32 billion in FY23). The growth will be sustained only by privatizing loss making SOEs and widening the export basket to something other than textiles, which make up 60% of shipments.

Reviving dormant wells and adopting the advanced extraction technologies, the Oil and Gas Development Company Limited (OGDCL) has doubled the output from Sindh’s Kunnar Oil Field to 1,820 barrels per day (bpd), from 1,060 bpd. The achievement is in sync with Pakistan’s energy import target of curbing imports, which consume 30 percent of its forex reserves. Such incremental gains are important because domestic oil production is still limited (85,000 bpd). 

To demonstrate Pakistan’s strategic logistics potential, Emirates has chosen to open a 90,000 sq. ft. cargo hub at Karachi Airport. By 2024, the hub handled 27,000 tons of cargo—15% more than in 2023 —making good use of Karachi’s geographic position as a regional transit node. In line with what CPEC aims to bring i.e. connectedness, however infrastructural bottleneck (congestion of ports) needs to be overcome. The project would create 5,000 jobs and increase the efficiency of exports, especially in the case of textiles and perishables.

The NA’s IT Committee has approved the Digital Nation Pakistan Bill 2024 that envisions tech driven governance framework. The bill thus digitizes 200+ public services and imposes cybersecurity protocols to provide efficiency improvements such as reducing passport issuance from 30 to 7 days, and nurture a $20 billion digital economy. According to critics, rural-urban digital divides must be addressed: only 4G technology reaches 35% rural areas, and 76% of rural households lack access to the Internet and that unless this is addressed, the digital revolution will not be inclusive.

Following Recommendations:

• Create new tax incentives on EV buyers and local battery production.
• Use AI to increase the number of filers from the current 3 million to a much larger number.
• Reduce the losses in the power sector by integrating the renewables and smart meters.
• Build scale of partnerships with Microsoft, other technology giants on coding boot camps.

All in all, cautious optimism is the economic narrative of Pakistan. Reforms in energy, digitalization and in infrastructure offer the basis to growth, but with the need for political consensus, inclusive policy as well as continuing quick adaptation to global trends. The path ahead is not easy, but well-trodden with foresight.

“Economic prosperity is not a destination but a journey of relentless innovation and equitable policies.” — Dr. Ishrat Husain.