THREE years ago, Pakistan’s economy shrank, and growth was at minus 0.5 per cent. The following year, 2020-21, the growth rate jumped up to 5.7pc, more than twice the initial target for that year set by the government. Call this the ‘V-recovery’ following Covid-19. Yet, even more remarkable, and unanticipated by every single economist, is the announcement that Pakistan is about to achieve 6pc GDP growth in the fiscal year which is about to come to an end this month. Moreover, this near 6pc growth is also considerably higher than the expected growth rate announced this time last year.

It is not often that government targets announced a year in advance are achieved in any single year, and here we have two consecutive years where the economy has grown considerably more than anticipated. Looking at these trends, at one level one can easily be misled into believing that Pakistan’s economy was moving ahead very effectively and was poised for take-off yet again, with substantial developmental returns and with all the people of Pakistan benefiting through trickle-down neoliberal economics. Add to this the remarkable fact that Pakistan’s per capita income is the highest it has ever been, and this line of argument gathers considerable credibility, notwithstanding the fact that we have not been given figures for inequality for many years.

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Yet, today, Pakistan’s government lies begging at the feet of the IMF for financial assistance, for survival, for fear of going bankrupt and defaulting, as if the economy’s growth evaporated in a matter of weeks. Something is very seriously wrong with Pakistan’s economy.

Just these few facts reveal that there are fundamental flaws in Pakistan’s economy, flaws which neither military governments, quasi-military governments, or those who claim electoral legitimacy, have been willing to address. Even if they are aware of these deep-seated structural issues, all governments are eager to avoid any serious economic reform, since these require serious commitment and willingness to take on numerous sets of vested interests, many of whom are direct or indirect supporters and are beneficiaries of government patronage and largesse. Every political arrangement is built on collaborators, whether from the polity or from property and capital, and undertaking reforms undermines these interests.

The economy is going to continue to be faced with multiple crises unless reforms which redistribute resources and relocate priorities are made.

More importantly, these trends also show that something is not quite right with the nature, manifestation and quality of growth in Pakistan, and the foundations on which this growth has been built are fragile, like a house of cards which comes crashing down after every short spurt of so-called impressive growth. Short-term gains matter far more to incumbents largely through rent seeking since this keeps collaborators, coalitions and vested interests liquid and profitable.

Recent global factors are also affecting Pakistan politically and economically. One is the fact that after four decades, the region is at a different stage of disequilibrium. At least for now, Afghanistan is no longer central to either Pakistan’s military or geopolitical focus, nor for the US or other actors. There has been a change in geopolitics more broadly across the globe and with regard to China, new alignments, new and changing priorities, both in the Middle East and beyond. Pakistan’s importance and value on the regional and global scale has been considerably diminished and this has economic consequences. Bailouts will not come so easily.

Importantly, there is considerable global slowdown, a war in Europe and very high and rising commodity prices. While similar to 2008, this time round China has not been able to rescue the world economy. While Pakistan has been somewhat immune to global trends in the past, perhaps it will be less so this time round.

For instance, amongst the 40 countries and regions listed in The Economist, which includes Pakistan, 37 countries and regions have faced significant devaluation vis-à-vis the US dollar, Turkey by as much as 50pc since last year and Pakistan by 23pc. With rising US interest rates and a stronger dollar, all currencies are going to be weakened, not just Pakistan’s.

Moreover, because of this and the war in Ukraine, commodity prices are expected to stay high for many months. Inflation is now a global phenomenon and expected to continue well into the next fiscal year. Pakistan will not be immune to such exposure no matter which economic policies it tries to adopt, with or without the IMF.

The economy is going to continue to be faced with multiple crises unless reforms which redistribute resources and relocate priorities are made. This is not simply about a single political party or the military’s interests in who and what they support. These are collective issues beyond the comprehension of those who make decisions, as the recent remarks by the former finance minister indicate. Whatever else Mr Shaukat Tarin may have said, what was considered most important was his clarification that his government had increased debt to 76pc and not 80pc as had been suggested. Policy has been reduced to bickering between interest groups.

It is foolish to expect the military and civilian elite which has ruled Pakistan in this era of neoliberalism to change their behaviour and priorities after having dominated Pakistan for decades. Both political groups pander to their elite constituents, whether local, national or global, and have ignored the needs and interests of the people in whose name they rule. No matter how much celebration there is in the numbers around exports, remittances and GDP growth, what matters to people is inflation about which one hears very little other than platitudes by the rich and the elite. The solution they have to this problem is more handouts, more ‘relief’, more charity. Moreover, giving Pakistan 22 previous programmes, most of which have failed outright or been terminated, also implicates the IMF in creating far more problems than it has been able to solve.

Pakistan’s economy does not need more of the same, yet another IMF rescue package, the same neoliberal economics, the same rulers. It needs disruption, not business as usual, a new path, radical alternatives, a different politics.

The writer is a political economist and heads the IBA, Karachi. The views are his own and do not represent those of the institution.

Published in Dawn, June 16th, 2022