THE legendary Charles Dickens quote, “it was the best of times, it was the worst of times … it was the spring of hope, it was the winter of despair” describes Pakistan’s current predicament perfectly. With the election of the PTI, many hope that tangible change will finally materialise. But a glance at the macroeconomic numbers quickly delivers a reality check.

Our economic and social challenges have rarely seemed as daunting as they do today, but then again, would the anti-incumbent PTI have triumphed so soundly if things were not as bad as they are? Would Imran Khan and his team of advisers be as earnest and humble as they are today had there been scope for complacency and arrogance? Were we not in such a pickle, would we as Pakistanis have been willing to embrace austerity in the years ahead to put our house in order?

In fact, I would go as far as to say that Pakistan is ripe for reform. Although the challenges of nation-building are many and monstrous, and a collective will is required to surmount them, both the nation and the leadership now have the right mindset. The recent history of emerging nations provides many examples of reform-minded leaders that have snatched proverbial ‘victory from the jaws of defeat’; Recep Erdogan in Turkey and Vladimir Putin in Russia in the early 2000s, as well as South Korea and Indonesia after the Asian financial crisis of 1998. So, as we in Pakistan contemplate how tough the road ahead is, it is worth bearing in mind that in some ways, the tougher it is, the easier it gets.

Pakistan can transform itself from an economic basket case to a breakout nation.

That is not to undermine the immediate challenge; the imminent balance-of-payments crisis indicates that the next couple of years will be a rough ride. However, as long as the needed structural reforms are kick-started and seen through, there is light at the end of the tunnel. Here I have highlighted four areas of improvement that offer the most effective means to balancing our books in the next three to five years:

• Improving agriculture efficiency is the low-hanging fruit to improve our economic situation. A 20 per cent improvement in yields and wastage could increase our agriculture GDP by $5billion per annum. In addition, it will improve the well-being of the majority of our population, which continues to live in the rural areas. According to a recent report by the Pakistan Business Council, Pakistan agriculture yields between 29pc-52pc lower than the world’s best averages. Furthermore, the lack of cold chain logistics, inefficient crop extraction and poor processing facilities result in as much as 50pc of wastage during harvesting and transport.

• Meanwhile, exports to GDP, which have fallen to 7pc from a long-term average of 11pc, can see an improvement of $8bn to $10bn as well, if only we get back to our long-term trend rate. Improving agriculture production is joined at the hip to increasing our manufactured exports, as they represent the raw material for exports. In addition, export-oriented sectors need to be provided with the right incentives to compete and flourish. Reviving the manufacturing sector is also critical to providing the much-needed jobs for our burgeoning youth.

• Tourism can also be become a major foreign exchange earner; by way of example, Sri Lanka has increased its tourism revenue ten-fold since the end of its civil war in 2009, and now earns in excess of $4bn per year from tourism. Pakistan, described by some as ‘world tourism’s best kept secret’ has significant room to grow.

• With im­­pro­ved confidence, security, and growth, foreign direct investment, or FDI, can reach 2pc of GDP, giving us a further fillip of $3bn to $4bn per annum. Pakistan’s FDI has currently fallen below 1pc of GDP. As an example, Turkey under Erdogan has managed to attract FDI at an annual average of 1.8pc of GDP in the last 15 years, compared to an average of 0.5pc of GDP in the decade before that. Pakistan under Pervez Musharraf also averaged FDI at 1.8pc of GDP. This highlights that FDI picks up tangibly as governance and growth improves.

Pakistan today stands at an inflection point. Despite the dark clouds of pessimism that hover today, if the PTI and Imran Khan can deliver the structural change needed, there is every chance that Pakistan becomes the next break-out nation; a South Asian miracle.

Of course, that will take time, 10 years at a minimum. But if steps in the right direction are visible over the next couple of years, being optimistic on Pakistan might pay off in a big way.

The writer works in Pakistan’s capital markets as a portfolio manager.

Published in Dawn, August 16th, 2018