Review of economic survey.

Byline: S. Kamal Hayder Kazmi

The Analysis of Economic Survey of Pakistan FY2019 analyzed that the macroeconomic stability is a fundamental pre-requisite for sustained economic growth. Pakistan's economy has experienced frequent boom and bust cycles. Typically, each cycle comprised of 3-4 years of relatively higher growth followed by a macroeconomic crisis which necessitated the stabilization programs. The inability to attain sustained and rapid economic growth is because of structural challenges which require effective monetary and fiscal initiatives to attain macroeconomic stability.

It has been also analyzed that the outgoing 5-year plan has seen an average growth of 4.7 percent against the target of 5.4 percent. This growth can be characterized as a consumption led growth. The unplanned borrowing from dissimilar sources increased both private and public consumption resulting in higher debt repayment liabilities, which created severe macroeconomic imbalances. The investment did not pick up as higher demand was met mainly by imports leading to enormous increase in external imbalances. Because of low growth in revenues and the unplanned and unproductive expenditures, the fiscal deficit widened. The present Government of Pakistan faces formidable macroeconomic challenges.

According to the Asian Development Bank (ADB) maintained Pakistan's economic growth rate forecast unchanged at 2.8 percent but cut the Indian output for the second time in 3-month to 5.1 percent. Following a steep growth slowdown in Pakistan to 3.3 percent during FY2019, signs of economic stabilization are emerging during ongoing fiscal year 2020, as forecast in the Update.

At 2.8 percent growth rate, the country's economy would be the slowest growing economy in a bloc of 8th South Asian nations. During September, the ADB had projected that economic growth rate in Pakistan would be 2.8 percent - the lowest in South Asia - and the inflation rate would be 12 percent - the highest in the bloc of 8ht nations - in the ongoing fiscal year. Now these projections have been kept unchanged, although the government of Pakistan has lately recorded that it would attain over 3.5 percent economic growth rate during FY2020 on back of recovery in the agriculture sector.

Pakistani economists also revealed that Pakistan is second to none having (almost) all the resources required to boost and attain economic growth, but remains a poor country. It is also important to note that the developing...