Looking ahead: Hope abound for the Pakistani economy

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The Islamic Republic of Pakistan commemorated 64 years of independence yesterday, August 14. Flags flourished in the nations skyline, green and white dominated the scene, and patriotic anthems marked the customary joy and enthusiastic fervor with which the momentous occasion is celebrated every year.

However, none could deny a grim uneasiness that lay latent beneath the spirit of patriotic merrymaking, weighing more heavily in the hearts of countrymen like the burden of unspoken sorrow. While the spirit of unwavering optimism and avowals of resilient hope reigned supreme, Pakistan continued to grieve for the crippling loss and dank despair that yet grips the democracy, and for the countless sacrifices it has patiently bourn, even as it knows there are yet more to be made.

Nevertheless, whatever may be the political and social outlook for the nation, it is its striking economic potential which stands as its most steadfast crutch of hope in the face of unequivocally challenging times. For it is in its own relatively succinct history that Pakistan has the most examples to reap.

A History of Resilience

Once the very ideal economic model that was the envy of most developing nations, particularly in the 1960s which saw counterparts such as South Korea literally forge the countrys Five-Year-Plan, Pakistan has a history of rebounding from the most troubling times with courageous aplomb, such as the post-1965 and 1971 wars growth spurts to name a few.

The astounding economic resilience it demonstrated through major challenges- such as the Asian economic crisis, as well as the most severe and longest-prevailing drought on the national record- leaves economic-historians spellbound to this day, even as the country constantly faced domestic political clashes that additionally threatened its stability.

However, it is its most recent history that most strongly indicates the extensive financial potential of the Pakistani economy. Until 2007, Pakistans economy maintained a growth rate of 7% per annum, even as the deadly 2005 Kashmiri earthquake that claimed an estimated 75,000 lives left its presumably fragile economy in jeopardy of a deep-seated recession.

In fact, Pakistans GDP constantly expanded annually between rates of 5-8% during 2005-07, which further prompted the Goldman Sachs Global Economics Group in 2005 to include the country in its list of N-11 which stands for the Next-11 group of economies that have essentially an ability to match the G-7 in size.

Back to the present: The status quo

Trouble began brewing up on the Pakistani financial front in the beginning of 2008 when the country stepped up its role in the US-instigated War on Terror, propelled by its international allies to realize its responsibility and strategic importance in eradicating terrorism.

First to take the blow was the countrys Balance of Payments, which nearly reached default when the International Monetary Fund bailed it out with an exorbitant loan that initially amounted to $7.6 billion, but now has climbed up to as much as $11.3 billion.

How it happened

The domestic instability that resulted in the aftermath of the ongoing crackdown on home-grown militancy quickly drove away foreign investment that was critical to the advancement of the economy, instantly generating economic stagnation that crept into all of its sectors.

Worst to be hit was the agricultural sector of the economy, as war and militancy surreptitiously brought farming activity in several areas of Pakistans agricultural hubs to a standstill, particularly those near its prized Indus basin, the richest resource of its agricultural endowments. This coupled with another crippling natural disaster the devastating floods of 2010, produced widespread domestic crop shortages, additionally hurting exports. The countrys balance of trade fiasco was further fuelled by electricity shortages that saw its industrial hub drenched in appalling darkness and inactivity for several hours a day.

As exports lagged and imports expanded without bound, while the rupee sank to abysmal news depths (currently about 86 PKR per US dollar), crippling inflation was only a matter of time.

Hope for the future

Even in the face of devastating trials and tribulations, Pakistan, currently the worlds 27th largest economy (in terms of Purchasing Power Parity), continues to scrape through the rough patch, persistently recording advancing annual growth rates in all sectors of its industry through recent fiscal years.

Being the third largest world producer of apricots and cotton seed, fourth largest in onions and cotton lint and the fifth largest of dates, among several other staple commodities, Pakistans distinct resource endowments are a massive treasure-chest for the economy. But these resources span much larger than just arable land and a plentiful supply of water.

Needs to dig deeper for success

However the real gold mine that provides the greatest economic promise for Pakistan is in the form of enormous mineral deposits that lie largely unexplored in the depths of its natural landscape, even as the country remains hinged to imports for a significant portion of its mineral and energy requirements.

Pakistans mineral reserves are reported to be the 5th largest in the world, and at least worth $500 billion. The recently launched Reko Dik Copper-gold project alone is estimated to reap about 0.3 million tons of copper every year whilst also exploring the worlds largest gold mine, whereas the Thar coal deposits discovered in Sindh are approximated to hold as much as 175 billion tones of the mineral.

And that just seems to scratch the surface, with the Duddar zinc lead mines, and sulphide zones discovered in areas of the Punjab province providing indubitable proof that the economic salvation Pakistan desperately seeks might just be lying beneath its feet.

Youthful potential

Theres yet another vast pool of potential for Pakistan that rests in what is most often considered an economys most powerful asset- its human resources.

With a population of over 180 million, Pakistan is the sixth most populous nation in the world. Over 95% of the population is below the age of 65, and approximately 60% of it is between the ages of 14-64, signifying the presence of a youthful and vibrant population capable of leading the economic development of the country.

Pakistans literacy rate, though lagging, has been continuously rising annually; currently standing at 69% of the total population. Furthermore, statistics highlight that its graduate pool has been rising at a sizeable rate annually as well. While 6.3% percent of its population comprised of university graduates in 2007, federal statistics project this figure to increase to as much as 10% by 2015, and further jump to 15% by 2020.

This indicates a striking opportunity for Pakistan to stir up its entrepreneurial activity, particularly higher-value sectors such as the service and IT industry as a pool of educated labor emerges. SMEs are already a thriving sector of the economy, making up 90% of all industrial activity.

Is lethargy and despair creeping in?

As the vibrant and zealous celebrations of yet another Independence day come to an end, what truly endangers the illustrious prospects of the nation is a pall of gloom that threatens to gradually settle over its atmosphere and swallow away the staunch optimism that has until now been its defining sentiment.

The recent violence that resulted out of ethnic clashes coupled with unrelenting militancy that continues to spill innocent blood highlight that the true challenges Pakistan faces are not as financial as they are political and social.
Therefore, if it is to ever realize its immense potential as a robust and remarkably-endowed global economy, it is high time Pakistan translated its beacon of hope into a united, unflinching stand against those very elements that obstruct it from fulfilling the glorious ambitions for which it was founded.

Sources: Wikipedia

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