Sombre outlook

Published January 8, 2024

THE latest edition of the United Nations’ World Economic Situation and Prospects report for 2024 has painted a sobering picture of Pakistan’s economy as it continues to face multiple challenges, including inflationary pressures, currency depreciation, and high levels of sovereign debt. The report projects Pakistan’s economy to grow by a modest 2pc this year and a slightly improved 2.4pc in 2025. This is in line with the projections made by multilateral agencies like the IMF and the World Bank, as well as the State Bank, and marks a slight “improvement” over economic contraction of 0.2pc during the last fiscal year ending on June 30, 2023. On top of low growth, it has warned of a potential rise in food insecurity. The UN’s flagship report primarily discusses international economic trends as the global economy is projected to slow from an estimated 2.7pc in 2023 to 2.4pc in 2024, trending below the pre-pandemic growth rate of 3pc. It also deliberates on the short-term risks and structural vulnerabilities to the global economy, pointing out that the sombre global economic outlook for the near term continues to be impacted by high interest rates, further escalation of conflicts, sluggish international trade, and increasing climate disasters. Needless to say that the headwinds facing the global economy will likely jeopardise meaningful progress towards the Sustainable Development Goals (SDGs).

With Pakistan already grappling with one of its most serious balance of payments crises that has forced the authorities to contract the economy last fiscal year with a view to avoiding a potential sovereign default, the grim global outlook poses additional challenges. However, the current crisis also offers a major opportunity to the country’s policymakers to reset the economic policy direction and fix the long-standing structural issues dragging down the country. Other nations, including India, Malaysia, the Philippines, Turkiye and Indonesia, have successfully used their respective crises in the past to put their economies back on sustainable, long-term growth trajectories. Even Bangladesh has left us behind as far as social and economic indicators are concerned. It must however be said that economic stability largely hinges on political certainty. No government can make tough, unpopular decisions and implement reforms in uncertain political settings.

Published in Dawn, January 8th, 2024

Opinion

Editorial

Smog hazard
Updated 05 Nov, 2024

Smog hazard

The catastrophe unfolding in Lahore is a product of authorities’ repeated failure to recognise environmental impact of rapid urbanisation.
Monetary policy
05 Nov, 2024

Monetary policy

IN an aggressive move, the State Bank on Monday reduced its key policy rate by a hefty 250bps to 15pc. This is the...
Cultural power
05 Nov, 2024

Cultural power

AS vital modes of communication, art and culture have the power to overcome social and international barriers....
Disregarding CCI
Updated 04 Nov, 2024

Disregarding CCI

The failure to regularly convene CCI meetings means that the process of democratic decision-making is falling apart.
Defeating TB
04 Nov, 2024

Defeating TB

CONSIDERING the fact that Pakistan has the fifth highest burden of tuberculosis in the world as per the World Health...
Ceasefire charade
Updated 04 Nov, 2024

Ceasefire charade

The US talks of peace, while simultaneously arming and funding their Israeli allies, are doomed to fail, and are little more than a charade.