Bloomberg has slotted Pakistan to be the most underrated economy this year for its steady economic position and promising future prospects.
Last year, Germany and Mexico were the two economies who received this title. Barring the bad reputation of Pakistan in the global eyes, the situation is not bad at all. The country has been in the news for all the wrong reasons during the last few years owing to its chaotic law and order situation. However, it has also calmed down recently.
Surprisingly, the latest developments have put the economy on a positive path be it a highly bullish stock market or surging foreign exchange reserves. The country’s leading equity market registered a substantial growth of 46 percent last year. Although, equity market trend cannot be a true indicator of the economic strength but it stills hints developments in multiple sectors.
Also Read: Pakistan – A Prospering Economy with an Underrated Image
Some Good Things…
The leading economic indicator i.e. Gross Domestic Product has been trailing at a steady rate of 4 percent almost reaching 5 percent. This highlights a relatively strong growth pattern. In the past, much of the growth was hampered as Pakistan was wrestling with terrorism which has reduced recently. During the last three years, the number of deaths caused by terrorism has reduced by two- thirds.
Poverty rate has declined by 50 percent while its growing middle class has given boost to consumerism. Consequently, the retail sector has been flourishing during the last few years. According to the Bloomberg source, currently 47 percent of Pakistani households own a washing machine while this figure was only 13 percent in 1991.
Coming to the macro indicators, the country is set to build a strong foreign exchange reserve base. Its tax to GDP ratio is still alarming standing at more than 60 percent. However, the recent respite due to IMF lending has given a breathing space to its widening fiscal deficits.
If we compare Pakistan to its neighbor India, we would not see a drastic difference in terms of economic performance. Nonetheless, the latter is renowned as a highly growing economy. Both the countries had comparable per capita incomes till the year 2008. Thus, Pakistan and India could both be slotted as highly growing South Asian economies, apart from many other things being common between the two.
The progress of Pakistan as a nation is vital for the entire region due to the following reasons:
- Pakistan is the sixth most populous country of the world with a population of approximately 200 million people
- The country is a nuclear power
- Corridor to many other strong economies like China
- A key to maintain peace in the region
Some Not So Good Things…
Looking at the reverse side, core issues such as poor education system and twin deficits cannot be ignored. In addition, exports have always been laggard while imports have been increasing steadily. Furthermore, investments have also been minimal.
Quick Read: 2017 – Economic Indicators Predictions for Pakistan
Pakistan’s political turmoil has settled to a large extent but there is plenty of room for improvement. There are other serious problems such as water and power shortages which have been causing chaos during the last few decades.
The author believes there is a significant scope for improvement in Pakistan’s economy which is why it has gained the title of the most underrated economy this year. Other economies such as Sri Lanka, Iran and Saudi Arabia are also strong contenders.
U.S economy has continued to maintain its strong position with strong performance in the equity market. Despite being notorious due to its current political scenario, American economic indicators are still steady.
Source: Bloomberg
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