Pakistan Economy Crisis: There is no possibility of the economy of the neighboring country Pakistan, which is struggling with the economic crisis, getting back on track. Here inflation has broken the record of years, and the value of Pakistani rupee is decreasing. Foreign exchange reserves are very less left in Pakistan. Also, foreign debt has increased to more than 130 billion dollars, due to deteriorating system, GDP is not increasing. If the system is not improved here soon, then this country will become bankrupt. Let’s understand today how Pakistan’s economy reached this bad condition…
Pakistan left behind most of the countries of South Asia
Pakistan is counted as a low-income developing economy in the world. Its rank in most of the development indicators set by the United Nations Development Program (UNDP) and the World Bank is said to be extremely poor these days. In recent decades, this country has been left behind by most of the countries of South Asia. The World Bank report states that foreign debt on Pakistan is one of its biggest burdens. Its rupee is dying in comparison to the dollar. Now one dollar is equal to 283 Pakistani rupees.
More youth population, yet 42nd rank in the world
While Pakistan is the 5th largest country in the world with a population of over 220 million, it has fallen to 42nd position in terms of GDP (nominal). This is also when there are 71.76 million labor force and about 67.25 million employees. That is, despite the large work-force and extremely young population, Pakistan is not as strong economically as it should have been. According to the report of the World Economic Outlook Database, Pakistan’s GDP is only $ 376.493 billion, many small countries of the world are many times ahead of Pakistan in this matter.
Rising inflation tore the common man’s pocket
There has never been such inflation in Pakistan before, due to the high prices of fuel and food grains, due to inflation, it has become very difficult for the common man to get food for two times. In the beginning of March, a report came from the Central Bank of Pakistan, in which it was believed that inflation is now out of control. Inflation has reached a 58-year high here. Within a few days, inflation broke another record when the State Bank of Pakistan increased the interest rate from 17 percent by 3 percent to 20 percent. In February, the monthly inflation rate here was 31.6 percent.
Inflation will increase further here
The MPC of the Central Bank of Pakistan said in a statement that they have suffered losses in recent financial adjustments and exchange rates. At the same time, there has also been a record increase in the inflation rate. In such a situation, the increase in interest rates in an attempt to bring down the inflation rate is less than expected. MPC estimates that the inflation rate in the country will increase further. One of the reasons behind this is the reform work to be done to meet the conditions of the IMF.
dwindling foreign exchange reserves
Due to excessive borrowing, weak rupee and high cost of fuel, Pakistan’s foreign exchange reserves have reduced drastically. If personal and corporate reserves are added to this, then in January 2023, Pakistan’s foreign exchange reserves were reduced to $ 8.4 billion, which was $ 22.6 billion in February 2022. After that in March 2022 it was $ 17.4 billion, in September 2022 it was $ 13.3 billion. Now in February 2023, it had gone to a lower level, in this too, most of the foreign exchange reserves were in Saudi-UAE deposits, which Pakistan would not be able to spend.
Eyes on getting loan installment from IMF
To improve its economic condition, Pakistan urgently needs an economic package of a few billion dollars, for this the Pakistani government has been pleading with the IMF for many months. A delegation of IMF had also come to Pakistan, but despite 10 days of talks, the installment was not released to Pakistan. In fact, later the director of IMF even advised Pakistan to learn to behave like a country.
Fluctuation on GDP growth
The future of Pakistan’s GDP growth looks bleak. Its GDP growth rate was more than 6% in the 70s. After that, it reached 10% in the 80s, although there was no significant increase in it for the last 20-25 years. In 2010 it had gone down to less than 2%. Now many experts are speculating that if the country gets an economic package, it can get a boost of up to 4%.
