Pakistan’s Economic Problems and Remedies I

Pakistan is rich in natural resources, its 60% population consists on youth, it has a fertile land of upper and lower Indus Valley, three ports, five big rivers, worlds three largest mountain ranges, Thar coal reserves, verities of fruits , located at a very important geographical location yet is depends heavily on debt. Before its dependence on debt it heavily relied on American and Western countries aid. The fact ignored that only those countries can develop themselves who take concrete and solid steps to move towards self-reliance and Trade not Aid. There are numbers of development models which Pakistan needs to follow like China, Singapore, Malaysia, Turkiye or Indonesia. Recently published The World Bank’s Report, “From Swimming in Sand to High and Sustainable Growth” highlighted Pakistan’s inability to allocate all its talent and its resources to the most productive uses has stunted economic growth.

Policy makers either have been blind to this reality or not cared about enhancing overall productivity because it does not suit its own purposes. Report also mentions powerful “Insiders” who regularly: influence” the policy making process to maximize their own benefits”. In Agriculture large landowners benefit from subsidy schemes or underpriced inputs that favour a “narrow set of crops “making themselves richer at the cost of entire sector. It stresses harmonious direct taxes across sectors to route more resources into “dynamic tradable sectors” like manufacturing and tradable services instead of typical investments in real estate and other non-tradable. The size of the tradable associated with growth in the economy and diminished money flow. Increasing exports is desperately needed, it ought to be sobering for policymakers that a ten percent import duty on any given product increases profit of selling it domestically. Pakistan is not tapping into its talent base properly. Women are underused because of constraints they face to participate in the labour force.” According to Najy Benhissine World Bank Country Director for Pakistan and co-author of the report said that it is shame that only 22 percent of women employed in Pakistan and female labour force participation is among the lowest in the whole world. Especially since closing this gap can bring GDP gaining of ,”up to 23 percent” besides creating 7.3 million new jobs for women.
Economic Indicators
Population : 241.49 million (2023)
GDP (Nominal) : US$ 340.64 billion (2023)
GDP ( PPP) : US$ 1,570 billion ( 2023)
GDP Rank : Nominal 46th PPP 24th ( 2023)
GDP per Capita ( Nominal: $ 1,471
GDP per Capita ( PPP) : $ 6,773

GDP by Sector : Agriculture 22.68 %, Industry 19.11 %
Services 58.20%
GDP by Component %
Household Consumption : 82
Government Consumption: 11.3
Investment in fixed Capital: 14.5
Export of Goods and Services : 8.00
Imports of Goods and Services : -17.6

Inflation ( CPI) : 29.4 % ( 2023)
Interest Rate :22 %
Population below poverty Line earning $ 3.20/ day : 35.7 %
Extreme Poverty : 5%
FDI ( 2022) : US$ 31.54 billion
Labour Force : 71.76 million
Employed : 67.25 million
Unemployment : 7 % ( 2023) 17.4 million unemployed
Main Industry
Textile, Apparel, Food Processing, Pharmaceutical, Surgical instruments, construction material, fertilizer, paper products, shrimps
Exports : US$ 35.210 billion (2023)
Export Goods : Textile $16.28 billion, Food US$ 4.74 billion
Chemicals and Pharmaceuticals $1.42 billion
Leather goods $627 million, Sports Goods
$ 461 million Petroleum $ 290 million


Export Partners %
USA 21.2
China 7.3
UK 7.00
Germany 5.7
UAE 5.3
Netherlands 5.2
Spain 4.9
Italy 4.1

Imports : US$ 60.013 billion
Import Goods
Petroleum : US$ 17.538 billion
Agriculture & Chemicals : US$ 8.253 billion
Machinery : $ 4.431 billion
Food : $ 7.966 billion
Textile : $ 4.565 billion
Metal : $ 3.450 billion
Main Import Partners %
China 18.6
UAE 14.3
Saudi Arabia 6.4
Singapore 5.3
USA 4.3
Indonesia 5.1
Kuwait 4.9
Malaysia 2.0
There is need for reducing regulatory complexity, harmonizing GST across provinces, regulating investment laws to attract more FDI ( Foreign Direct Investment), and also upgrading insolvency laws to reduce cost of liquidating non-viable firms. Pakistan’s main problem is the inability of policymakers to put words into action. It is unforgivable that Pakistani firms struggle to go large as they grow old, and one that has been operating for 10-15 years is, on average about the same size as one that’s been around for more than 40 years. This lack of dynamism has created a situation where the average Pakistani exporter is less than half the size of one in Bangladesh.
The SOE’s annual report for the fiscal year 2018-19 released by the Ministry of Finance states that the overall losses were the highest in FY2018, amounting to Rs286 billion, which were curtailed to Rs143 billion in FY2019. This improvement in the financial performance of SOEs was mainly due to the reduction of losses in the power sector of selected SOEs during FY2018-19.
This time, the Ministry of Finance shared list of 10 top profit-making and 10 loss making PSEs and informed that OGDCL earned the profit of Rs118.3 billion, PPL Rs59.4 billion, and Government Holding Power Company Rs34.1 billion in the fiscal year 2019. The top 10 loss-making PSEs included National Highway Authority (NHA) Rs173 billion, then PIA Rs56 billion, QESCO Rs36.8 billion, LESCO Rs36.6 billion, PESCO Rs29.2 billion, MEPCO Rs22.7 billion, ZTBL Rs18.1 billion, Pakistan Steel Mills Rs16.5 billion, SEPCO Rs10.9 billion, and Pakistan Post Offices Rs9.13 billion in the fiscal year 2019.
The SOEs had turned into net losses in the fiscal year 2015-16 when it stood at Rs237 billion, Rs187 billion in 2016-17, Rs286 billion in 2017-18 and Rs143 billion in 2018-19.
To be continued