Harvard predicts Pakistan GDP to grow by 6% over 10 years
EXCLUSIVE: Pakistan’s predicted annual growth rate over the next 10 years is nearly 6 percent, according to the revised growth projections presented by researchers at the Center for International Development (CID) at Harvard University.
This is 1 percent GDP increase in a year. In Harvard CID’s earlier projections, Pakistan GDP was set to grow at 5 percent by 2025.
Although China is a huge-sized economy (current GDP at $12 trillion) and cannot be compared with Pakistan (current GDP at $300 billion), Pakistan’s 5.97 percent growth rate is higher than China’s, which is set to grow by 4.41 percent.
This exclusive story first appeared in The Express Tribune on 7 July. It was later carried by Geo TV and ARY TV.
CID’s growth projections are based on measures of each country’s economic complexity, which capture the diversity and sophistication of the productive capabilities embedded in its exports and the ease with which it could further diversify by expanding those capabilities.
Led by Harvard Kennedy School professor, the research is called The Atlas of Economic Complexity.
CID claims that the economic complexity not only describes why countries are rich or poor today, but can also predict future growth, about five times more accurately than the World Economic Forum’s Global Competitiveness Index.
Pakistan’s giant neighbour India is predicted to grow by 7.72 percent, the world’s highest.
CID believes that the economic pole of global growth has moved over the past few years from China to neighbouring India. It is likely to stay there over the coming decade.
Except for India, Pakistan will beat all Asian economies in GDP growth. These include today’s giant Muslim economies as well.
Here are some regional countries (and their GDP growth) Pakistan will be ahead of:
Muslim and South Asian countries
- Indonesia 5.82%
- Turkey 5.64%
- Malaysia 4.82%
- Sri Lanka 3.77%
- Saudi Arabia 3.17%
- Bangladesh 2.82%
- UAE 2.41%
Shanghai Cooperation Organisation (SCO) countries
- Kyrgyzstan 5.77%
- Tajikistan 3.61%
- Uzbekistan 3.32%
- Kazakhstan 2.65%
- Russia 2.60%
According to CID, the central reason of income differences is knowhow: poor countries produce few goods that many countries can make because of lack of knowhow, while rich countries produce a great diversity of goods, including products that few other countries can make.
The CID uses this fact to measure the amount of knowhow that is held in each economy.
A major trend that emerges from The Atlas of Economic Complexity is that growth in emerging markets is predicted to continue to outpace that of advanced economies, though not uniformly.
In addition to Pakistan, the CID projections are optimistic about new growth hubs in East Africa and new segments of Southeast Asia, led by Indonesia and Vietnam.
The CID notes that economies based on commodity output face slower growth rates as commodity prices continue to remain under pressure.
With special economic zones (SEZs) being built under China-Pakistan Economic Corridor (CPEC), it is an opportunity for Pakistan to move away from commodity output by producing value-added goods in joint ventures with Chinese firms and increase its exports. This way, Pakistan can have even faster income growth.
The Harvard growth projections are in line with other short-, medium- and long-term GDP growth forecasts for Pakistan on this blog.
HSBC: 5% leading to 2050
IMF: 5.5% leading to 2020
The World Bank: 5.8% leading to 2019
The Economist: 5.7% in 2017
To materialise this growth projection, what needs to be done is a multi-pronged strategy. Pakistan needs to diversify its product capabilities.
With likely new FDI inflows, Pakistani firms can go into producing value added goods both for domestic consumption as well as exports.
Those firms which are currently content with domestic sales turnover need to introduce some percentage of exports to their strategic plans.
Similarly, the agriculture sector needs to address its lack of sophistication and crop and distribution losses. The cumulative effect of even modest steps will help increase our GDP growth.