With the arrival of Nawaz Sharif’s government in May 2013, I started a series of strong and positive forecasts about the fate of our country on various social media outlets, particularly on my Facebook pages. Something that the mainstream analysts were not accustomed to. I was a lone voice at that time.
Continuing this, last year, in a piece for The News, Pakistan’s largest-selling English-language newspaper, on Pakistan of Future with the help of data I predicted that we are on a fast track to become one of the top 20 economies in the world in 2050. With better fiscal management, we are likely to achieve that mark even by 2025.
Those who blamed me for too much optimism in the past two years, today we got a stamp from an authority no less than that of The Economist London. The Economist is the most prestigious and authoritative magazine for this side of the Atlantic.
In the 2 May piece on Pakistan’s economy for the print edition, The Economistpraised Pakistan for a a rare period of optimism and credited Nawaz Sharif for some of Pakistan’s current successes.
We are reproducing the piece with bold for emphasis for a quick read while you are on the go. Enjoy!
THOSE in search of a thriving stockmarket, a stable currency and low inflation would not normally pitch up in Pakistan. It is more readily thought of as a pit of instability than as a source of opportunity. Yet Pakistan is enjoying a rare period of optimism about its economy.
The IMF reckons that the economy will grow by 4.7% next year, the fastest rate in eight years. Consumer prices rose by 2.5% in the year to March, the smallest increase for more than a decade. Twice already this year the central bank has lowered its benchmark interest rate.
Some indicators are pointing to an upturn in spending. Compared with a year earlier, cement sales, which are a guide to how much construction is taking place, rose by 5.5% from July to March. Car sales rose by 22% over the same period.
A fall of two-fifths in the oil price is a huge slice of luck for a country such as Pakistan. It relies on imported fuel oil for two-fifths of its power supply and is prone to periodic balance-of-payments crises (see chart, above).
The country’s import bill can easily overwhelm the foreign-exchange earnings from textile exports and the remittances that Pakistanis working in the Middle East and Europe send home.
In 2013-14 Pakistan’s net import bill for oil came to $12.6 billion, or around 5% of GDP. But if oil prices stay low, Pakistan could save a total of $12 billion in the next three years, says the IMF.
The money could be spent on things with more local content and give the economy a lift.