Pakistan Economic Outlook 2035: A Vision for Growth and Poverty Reduction

Introduction:

The National Economic Council (NEC) recently approved the Pakistan Economic Outlook 2035, a visionary concept aimed at propelling the country’s economy to reach $1 trillion and reducing poverty to 15% by the target year. The achievement of these ambitious goals is contingent upon political stability, and failure to ensure stability may have dire consequences, as outlined in the Planning Commission’s documents. In this blog post, we explore the key objectives, challenges, and potential pathways to realizing Pakistan’s economic aspirations.

Aiming for a Trillion-Dollar Economy and Poverty Reduction:

Led by Prime Minister Shehbaz Sharif, the NEC, a constitutional body responsible for macroeconomic planning, endorsed the Pakistan Economic Outlook 2035 concept. The plan also included the approval of the Annual Plan 2023-24, which set a GDP growth target of 3.5% and an inflation target of 21% for the upcoming fiscal year.

The Need for Reforms and Political Stability:

In the absence of significant reforms, Pakistan’s economy is projected to grow by a mere 3.5% annually over the next 12 years. To double the size of the economy to $1 trillion, immediate reforms are crucial. Political instability, rapid population expansion, underutilization of the youth demographic, inadequate human resources, and policy discontinuity pose significant challenges to achieving these goals.

Implications of Inaction:

Without implementing reforms, Pakistan’s population is projected to reach 340 million by 2035, making it the fastest-growing nation globally. Furthermore, the economy will exhibit a low growth rate of 3.5%, leading to a rise in unemployment to approximately 9%. The absence of structural transformation could result in 40% of the population living below the poverty line.

Envisioned Transformational Scenario:

To achieve accelerated economic growth, the Pakistan Economic Outlook 2035 emphasizes an average annual growth rate of around 6% and progress in all sectors. The size of the economy is projected to experience significant expansion starting from 2027. Additionally, export growth is a key focus, with the goal of increasing exports from $51 billion to $127 billion through sectoral reforms and resource mobilization.

Importance of Increasing Exports:

Failure to enhance exports to $100 billion in the next eight years could hinder Pakistan’s ability to break free from the debt trap. Insufficient growth in exports may lead to volatility in the external sector, impacting debt, deficits, and currency values.

Challenges in Governance and Infrastructure:

Structural transformation is crucial to mitigate poverty and unemployment. It is essential to improve governance, enhance the capacity of the civil apparatus, and address pending cases in the judiciary. The concept paper highlights the need for additional judges and police stations to meet future demands.

The Path to Transformation:

The government must choose between a business-as-usual approach or adopting a transformative path. The former is unlikely to unlock Pakistan’s true potential, while the latter offers a chance to achieve sustained high GDP growth and become one of the top 25 economies globally. The government’s commitment to Vision 2025 was pivotal, but a lack of continuity hindered progress. Investing in human capital development and adopting productivity-enhancing measures are crucial steps in achieving long-term economic growth.

Conclusion:

The Pakistan Economic Outlook 2035 envisions a prosperous future for the country, marked by a trillion-dollar economy and a reduced poverty rate of 15%. However, achieving these goals requires political stability, export growth, and enhance the capacity of civil apparatus. Investing in human capital development and adopting productivity-enhancing measures are crucial steps in achieving long-term economic growth.