The State Bank of Pakistan has recently reported improvements in the economy, which can rightly be attributed to the foundation laid down by the PDM government, led by Prime Minister Shehbaz Sharif. However, this progress will be short-lived unless a democratically elected government is formed through general elections and continues the policies set by the Shehbaz-led government.Analysts say that even in Punjab the projects initiated by Shehbaz Sharif with meticulous speed, have now recently completed and some are nearing completion.
The current account deficit is showing signs of improvement, with a decrease in the deficit and an increase in foreign direct investment (FDI) inflows. According to recent economic data for the first half of FY24 released by the State Bank, Pakistan recorded a current account surplus of $397 million last month, marking the second consecutive month of surplus. This has contributed to reducing the six-month deficit to $831 million, down from $3.6 billion in the same period in the previous fiscal year. Additionally, FDI inflows have surged by 35% to $863 million from $640 million during the same period.
While these developments are positive, there are concerns about their sustainability and their potential to drive economic growth, job creation, and address the country’s balance-of-payments challenges. The improvement in the current account can be attributed to temporary measures implemented by the government to restrict imports. The increase in export revenues, remittances, and FDI in December has contributed to the current surplus. However, these improvements are not indicative of a consistent trend and are relatively modest.
In reality, the overall economic situation remains challenging and only a stable government as a result of general elctions with five years tenure can gurantee sustainability and logevity.
The recent improvements are largely the result of temporary measures, and the underlying issues persist. The economy contracted in the previous fiscal year, and growth projections for the current year are not promising. Export growth is hindered by low productivity and heavy reliance on textiles. Foreign and local investors are showing reluctance, and remittances remain subdued. The country continues to grapple with rising poverty and food insecurity, exacerbated by rapid population growth and inadequate public services due to financial constraints.
Addressing these challenges will require a concerted effort to address structural issues and foster sustainable economic development. Let’s hope the government is formed after general elections continues economic reforms and does not re-invent the wheel rather continues the policies of previous coalition government under premiership of Shehbaz Sharif.
