Elusive stability

Although Pakistan has achieved some degree of economic stabilisation, low economic growth, persistent inflation, external risks and energy problems remain major obstacles to achieving long-term economic stability. According to IMF projections, Pakistan’s GDP growth is expected to remain at 3.5 per cent for the ongoing fiscal year, which indicates that the pace of economic recovery is still modest. Meanwhile, inflation has risen back into the double digits, which may erode purchasing power, increase the cost of living and further slow economic growth. Similarly, the current-account deficit is projected at 0.9 per cent of GDP, indicating that Pakistan’s external sector remains vulnerable to import pressures and fluctuations in foreign-exchange earnings.

Further geopolitical tensions in the Middle East and possible disruptions to oil supplies could also send energy prices even higher, increase Pakistan’s import bill and place further pressure on inflation and the balance of payments. Therefore, Pakistan needs sustained structural reforms, prudent fiscal management, energy security and stronger social protection to convert short-term stabilisation into durable and inclusive economic growth.

Abdul Jabbar Gola

Quetta