Breaking: Pakistan fourth fastest-growing economy in the world in next 35 years
Over the next 35 years, Pakistan is forecasted to be fourth fastest-growing economy in the world, only after Vietnam, India and Bangladesh, according to a new 2017 PwC report released today.
Pakistan’s GDP MER is likely to grow at an average of 4.4 percent annually for a period up to 2050, the report titled The Long View: How will the global economic order change by 2050? by PricewaterhouseCoopers (PwC), world’s Number 1 accounting and consulting firm, predicts.
With data, the future is different | Wali Zahid | TEDxNUSTKarachi
Pakistan to become 19th largest economy by 2050 by GDP MER
By GDP (gross domestic product) MER (market exchange rates) terms, PwC forecasts Pakistan to become world’s 27th largest economy by 2030 ($776 billion) and 19th largest economy by 2050 ($2.83 trillion). Today at $284 billion, Pakistan ranks as 28th largest.
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Contrary to media-induced popular belief, Pakistan is rising
The 2030 and 2050 PwC forecasts for Pakistan are quite contrary to popular belief that most in-country and overseas Pakistanis hold about Pakistan’s future, thanks in large to prime-time TV talk shows, print media and social media-induced narrative-building.
The media only emphasises poor governance, public-sector corruption and rising public debt to discredit political governments, thus ignoring the macroeconomic factors that are helping Pakistan on a path to growth.
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Pakistan to become 20th largest economy by 2030 by GDP PPP
By GDP PPP (purchasing power parity) terms, Pakistan will become world’s 20th largest economy ($1.86 trillion) by 2030 and 16th largest economy by 2050 ($4.23 trillion). Today, it ranks as 24th largest ($988 billion) by GDP PPP.
Contrast Pakistan with Canada, for example. Canada is currently ranked as the 17th largest economy, but by 2030 it will slip to 18th and by 2050 to 22nd economy.
Which economies Pakistan will leave behind
By GDP PPP, in 2050, Pakistan ($4.23 trillion) will leave today’s these economic giants behind:
Iran ($3.9 trillion)
South Korea ($3.5 trillion)
Italy ($3.1 trillion)
Canada ($3.1 trillion)
Bangladesh ($3 trillion)
Malaysia ($2.8 trillion)
Thailand ($2.7 trillion)
Spain ($2.7 trillion)
South Africa ($2.5 trillion)
Australia ($2.5 trillion)
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China and India top two economies in 2050
This Long View report suggests that China ($58.5 trillion) and India ($44.1 trillion) will become world’s Number 1 and Number 2 economies, respectively, by GDP PPP, leaving US ($34.1 trillion) behind at Number 3. Earlier forecasts by Goldman Sachs had put US at Number 2.
Incidentally, Pakistan is the only large country that shares border with both future giants.
Indonesia ($10.5 trillion) will become 4th largest economy by 2050 by GDP PPP terms.
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Reason: Fast-growing population
The report attributes growth in Pakistan and other emerging economies to relatively fast-growing populations, boosting domestic demand and the size of the workforce. Although this growth ‘needs to be complemented with investment in education and an improvement in macroeconomic fundamentals to ensure there are sufficient jobs for growing numbers of young people in these countries.’
The growth is also attributed to falling costs of starting a business in Pakistan and other emerging economies.
The future world
Five challenges for policymakers
So, what are the challenges for policymakers in achieving sustainable growth? PwC highlights these five:
- Realising growth potential will require governments to implement growth-friendly policies that attract businesses, investment and talent
- Revive stagnating global trade growth, engaging in global markets, sharing best practice, and supporting the fluid movement of goods, services and people around the world
- In the face of rising inequality, governments need to ensure the benefits of growth are shared more broadly across society. In particular, they need to support education and lifelong learning to create vibrant and dynamic workforces
- Governments need to make concerted efforts to tackle climate change and align growth with long-term environmental sustainability
- Underpinning all of these policy actions needs to be strong, reliable and trustworthy institutions that develop strong macroeconomic fundamentals and enact structural reform.
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Critical role of institutions
PwC’s Long View emphasises the critical role of institutions in order to develop resilient economies. ‘Countries need stable governance that supports broad-based growth throughout society and strong macroeconomic fundamentals.’ Five measures could include:
- An independent and credible central bank which acts to keep inflation around a stable target, reducing volatility and mitigating the risks of currency crises
- A fair and efficient tax regime which redistributes income amongst society, supports social development, such as education and healthcare, and sets out a clear and stable taxation policy applicable to all businesses
- An appropriate degree of intellectual property rights protection which ensures individuals and businesses are rewarded for their innovations, stimulating technological progress and entrepreneurship
- Effective environmental regulation which promotes sustainable economic growth
- High levels of trust which encourages businesses to operate within a country and promotes social cohesion
Full 2017 PwC report here.
Understanding Pakistan Series