There are no amount of self -contracting ads of the full page in the newspapers on the first anniversary of the elections of February 8, 2024, together with the television ads that show a prime minister with a vision of the benevolent future that instructed a Girl above all that has been achieved for the economic announcements of Pakistan the revival, and what must still be done, will hide the deep rot under reality political, economic and social of the country. Celebrating the ‘Renaissance’, although understandable under the current dispensation of political economy, ignores fundamental and deep structural problems that undermine any ambition to fly, either under the Uraan program or in terms of the growth rate.
Not to spoil the celebrations, since there are reasons that clearly reveal that Pakistan’s economy, at least, and what is more important, as elapsed by a series of numbers, has shown great signs of improvement in recent years, and especially from the tumultuous months of spring spring 2022. The inflation rate is reduced to the lowest in almost a decade since its highest point only 15 months ago. The exchange rate has been stable for almost two years, something that shows not only a better management but also a considerable situation of payment payment balance. In addition, Pakistan is expected to reach his greatest entry of foreign remittances in this financial year.
Even the interest rate has been reduced by half in recent months and there are small signs that credit to the private sector can increase. The 24th IMF program of the IMF World record also seems to be well ongoing for review next month, and the IMF is expected to throw its second section. Since all these numbers look so good, what is the problem?
The numerous other sets of numbers not cited by government sources suggest that things are not as dazzling as those claimed by those who run the country. The first fundamental problem lies in the perpetual question of “legitimacy”, where it is obvious to everything that the party and the leader who won the greatest number of votes in 2024 are not in power. Even if we put aside this annoying fact, there are other reasons to think differently where our economy is today and the instructions in which it is directed.
The economist Hafiz Pasha, in a series of articles and interviews, has argued that up to 44 percent of the population of Pakistan currently lives below the poverty, a line of poverty that simply allows surviving with a very basic income. If more than 100 million people live below the poverty line, and since the number has increased in recent years, any “revival” is supposed to have not affected this population.
In addition, although it is a great relief that the inflation rate is currently less than 3 percent, prices continue to increase and those that have low and fixed income lose every month. In addition, Dr. Pasha’s calculations show that the current unemployment rate is greater than 9 percent. It also shows that the true salary of workers in Pakistan has seen a fall of almost 20 percent in the last three years. With marginal growth in GDP in the last five years, these numbers are not surprising, especially when population growth is greater than the growth rate of the economy. At least, Pakistan can celebrate having the highest population growth rate in the world.
Many of these supposedly extraordinary numbers matter little to most Pakistani.
These numbers counteract any ‘rebirth’ claim and progress with respect to the economy that improves and has a real effect. The numbers look good, but they have not translated into a real improvement in people’s lives. But this is only the top of the very large iceberg that hides the worrying trends.
In an upcoming productivity report in Pakistan, which will be published by the State Bank of Pakistan, some key numbers are extremely disturbing. On the one hand, the quality of labor and work productivity has decreased in the last two decades that show serious inefficiencies in production. The Pakistan savings rate, so crucial for investment, is half of the rest of South Asia, as well as its investment rate. With structural and deep trends so low, low labor productivity and low savings and investment trends, “revival” and progress remain out of reach.
However, the most disturbing trend that this study reveals is related to human capital. The secondary registration rate of Pakistan today is at the level where South Korea was in 1972, while the tertiary registration rate of Pakistan today is where the South Korea was in 1979! These are surprising numbers that show that in terms of human capital, so critical for information and technological age, Pakistan is four decades from South Korea. It is not surprising that none of the numbers published by the Government congratulates itself for its supposedly fantastic presentation, show these figures.
Clearly, economic numbers are better now than those that were only two years ago. However, many of these supposedly extraordinary numbers matter little to most Pakistani. The stock market is the best indicator of such false exuberance. The stock market may have broken many records every month during the last year or so, but the fact that, in the best case, only 300,000 people invest in the stock market, of which a minute fraction consists In active investors, it is great evidence of what numbers matter and that are completely irrelevant.
Unless economic policy focuses abruptly on issues that affect people directly, such as wages and labor equity, these celebrations make no sense. Numerous mous are signed with visiting dignitaries, but they are mere photos of photos; Little substance leaves these events. With the unfortunate school and university registration rates, especially for girls, with the Internet and their technology deliberately interrupted, and approved laws that restrict free thinking and speech, a key opportunity for income from income for the population is reduced.
If this were really a revival, a turning point for the future, one should have seen mainly programs for 44pc that are below the poverty line, and whose real wages have fallen. The numbers have improved, but the life of most Pakistani have not done so.
The writer is a political economist and heads the IBA, Karachi. The opinions are yours and do not represent those of the institution.
Posted in Dawn, February 20, 2025
