As the World Bank's recent report suggests the current fiscal year is expected to be unfavourable for Pakistan’s GDP, the country must consider implementing unconventional measures in order to improve its growth performance, emphasised Abid Qayyum Suleri, Executive Director of Sustainable Development Policy Institute (SDPI). According to the report, Pakistan’s real GDP growth is projected to reach only 1.7% in FY24 and 2.3% in FY25. High inflation stemming from rising domestic energy costs and currency depreciation is expected to restrain economic activity. Without comprehensive reforms, the improvement in private investment and exports is likely to be minimal.

Talking to WealthPK, Suleri said that a high growth rate for Pakistan is achievable when the policymakers give up relying on traditional tools and options. “Conventional wisdom around achieving a high GDP rate will no longer work for the country.” Resting the country’s growth on domestic resources is the primary step, which could ensure a GDP growth rate of 5% or above, he said. “The common practice to improve economic growth up to this point has been to seek foreign assistance in the form of aid or loans.”

“Reliance on domestic resources would involve actions to streamline fiscal expenditures by reducing or eliminating unnecessary and regressive subsidies. Moreover, efforts could be directed towards rebuilding private sector confidence through regulatory reforms in business and restructuring state-owned enterprises.” Suleri asserted that addressing inefficiencies and mitigating high costs in the energy sector are also integral to these measures. The World Bank’s report mentions that the agriculture sector is expected to recover on the back of higher production of important crops, including cotton and rice.

In this context, Suleri stressed that the GDP can be enhanced by linking agriculture with the value-added manufacturing sector. While mentioning the most important tool of economic growth in modern times that has never garnered the attention of policymakers in Pakistan, he said, “Implementing measures to enhance financial inclusion, making credit and financial services more accessible to a broader segment of the population in Pakistan can stimulate economic growth.” The low GDP forecasts for Pakistan are worrisome. However, using the right set of unconventional policies, the country can achieve a growth rate higher than forecasted.

Credit: Independent News Pakistan (INP)