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MAJOR ISSUES IN THE

ECONOMY OF PAKISTAN
CHALLENGES TO ECONOMY OF PAKISTAN:
Economy of any state is very critical and it governs that how stable and how
strengthen the state. So it is very much significant for ever country to make sure
that the economy of the state is stable and is strong enough to go through the
ups and downs in the country internally and externally . Pakistan is sole of the
countries which have seen so many variations in the economy of the state
because of so many internal and external circumstances which have eventually
affected and delayed the growth and the stability of the state.

The head office of only one Pakistani owned bank was located in Pakistani
territory. After a long battle India released a much smaller amount than the
legitimate share of Pakistan. (StudyFind,2013).

I was pleasantly surprised to learn that even in the worst of circumstances the
Pakistani economy had been raising at 5.2 percent annually during 1960-2010.
The condition is bad since then but there are some impressive growths. Pakistan
is performing better than ever Bangladesh when it comes to microfinance while
private initiative is helping education go forward significantly (Ahmed,2013).

Not with standing numerous challenges that we faced finished the last 65 years,
Pakistan has done reasonably well on economic forward-facing. Pakistan’s
economy has grown at a normal rate of 5.0% per annum over the previous 65
years (StudyFind,2013).

1. WAR ON TERROR:
After the incidence of 9/11, Pakistan is the country which was greatly
affected by the terrorism. Pervaiz Musharraf’s poor governance and bad
policies of war on terror lead Pakistan towards great disaster. As Pakistan
is connected to Afghanistan geographically and is an ally of America in war
on terror, therefore facing great threats and terrorism. A huge part of
budget is spent on war on terror and other security measures.

War against terrorism is another very important reason behind the


economic problem. War is distressing the world’s economy and is
triggering problems like lack of fuel, lack of funds, rise in health problem
etc. War welfares none, someone is offended badly and someone is
destroyed completely (jalil,2013).

2. WE CONSUME MORE AND SAVE LESS:


When government spends more on non-development activities, the
government spends more on unnecessary things and it lead to bad
economic conditions.

The influx of refugees from India created insurmountable problems as the


country had no resources to meet this challenge (StudyFind, 2013).

We get more income then we start utilizing the money in excess of


unnecessary needs. We start utilizing expensive things. When we start
buying expensive things then we are left with less money so when we start
wasting money then we are left with less money.

3. POOR ACADEMIC SET-UP:


Other major issue of our country is that we have a poor academic set-up.
The education is compulsory in our constitution but we as a nation do not
practically implement this rule. The primary education is given to the
students then when they enter the universities then they came to realize
that our academic set-up is such that there are no such opportunities to
accelerate.

4. ENERGY CRISIS:
Energy crisis is the most important and critical economic problem which
has affected the growth of the state unfavorably, the load shedding of
Electricity, petroleum, CNG and Natural Gas has produced various
problems and has resulted in the conclusion of several and many
industries which has increased unemployment (StudyFind, 2013).

5. INADEQUATE EXPORTS:
Check-out 2007-2008, 80% of our imports were financed by our export
earnings. This ratio has come down to only 50%, it may go up to 60% but a
gap of 40% of financing needs in order to keep with the import level still
occurs. As a nation we desire to use even the basic commodities of foreign
countries rather than nearby manufactured goods. Except we do not
change this boldness of favoring the imported goods we have to keep on
trusting on outsiders to fill in this gap b/w our imports and exports.
Relaying on outsiders’ means that there are sequences, ups, and downs
i.e. when things are upright, one gets financing, and when things are bad
one starves for financing. No nation which strikes to preserve its honor
must go through this specific route. The lesser is this gap between our
export earnings and expenditure on imports and that can be achieved only
by expending our exports; our reliance on external sources would be
reduced.

6. INFLATION:
Inflation rate in Pakistan is very high and it is one of the most adverse
problems of Pakistan these days. The average inflation rate of Pakistan is
8.03. .In January of 2014 the inflation rate was 7.90. The devaluation of
Rupee is creating problems for our country.

The imports have increased in a significant manner and the exports are
falling daily this major reason why the country like Pakistan is unable to
keep the inflation rate down.

7. LACK OF TOURISM:
Terrorism is on the top of the slant, as Pakistan is facing problems of
terrorism for such a long time now and fronting the religious radicalism
and the ruthless activities of Taliban and other agencies. This factor has
totally eradicated the international investment in the country, so the
exchange of external currency is being stationary. This has exaggerated in
adverse manner that the economy is completely based on what the
country is producing the moment because no foreign help in exchange is
being done (Liaqat, 2014).

Pakistan is a country in which there is extreme scenic beauty and in the


recent times the tourism industry in Pakistan has donated immensely in
the economy of the state, but due to the natural tragedies and the law and
order situation of the state, the terrorism has abridged the tourism of the
state and that has unfavorably provoked the economy of the country for
this reason the country has to work on the law and order situation of the
country (StudyFind, 2013).

8. OUR SHARE IN THE WORLD TRADE IS


SHRINKING:
In 1990, Pakistan’s share was 0.2% of the world trade. After 20 years it has
come down to 0.12% in a very floating world economy. World trade has
been mounting faster as compared to the world output. India in the same
period had doubled its share from 0.7% to 1.4%, while Pakistan is going
the other way and that is the reason why exports/imports imbalance is
snowballing. We are not taking advantage of the opportunities which a
floating world economy is of. Pakistan is stuck with only a few
commodities-textiles, leather, rice, sports, goods and the surgical goods.
We have not arrived the markets for more active products. All our exports
are to a few markets – the USA, EU and the Middle East. So this narrow
export base and very limited geographical spread are not allowing us to
enlarge our share. Except we improve the quality of our products, go out
and do the marketing overseas, invest in research and development, the
prospects do not look promising. That is why we are casing overdue other
countries which from way back aired over taking Pakistan.
India refused to release allotted share of cash balance of undivided India
to the tune of Rs 75 crore (Rs. 750 million) for running the civil
administration (StudyFind, 2013).

9. INVESTMENT FAILING:
Investment has fallen drearily. Consequently, the investment climate and
the constraints imposed by a woefully bad energy crisis have to be tackled
with determination in order to attract foreign and internal investment.
The article on energy is severe and informative, nut the need to tap
alternative renewable energy sources is not adequately emphasized.
Pakistan should be preferably suitable for solar energy technology.
Unnecessary to say, familiar corruption and mismanagement of our
meager resources are a great disgrace. Defense expenditure has to be
condensed. It is a huge gutter on national resources. A very strong
emphasis is laid by the specialists on the rule of law, clearness and
institution building. Equally, a very powerful disagreement is developed in
favor of inclusive growth by Kamal Husain (Ahmed, 2013).

10. POLITICAL STABILTY, LAW AND ORDER:


The overall curving theme is that for a robust economy we should have
political stability, law and order and security. The Armed Forces of
Pakistan deserve thankfulness for what they have done in Malakand
Division to bring about stability as far as the law and order situation is
worried. The sooner the country is gotten rid of this image of political
instability, poor law and order situation, whereby depositors from all over
the world hesitate in coming to Pakistan and invest, we will not be able to
make any progress in this country. In 2007, Pakistan was one of the most
preferred countries among the international investor community. A thirty
year piece of paper was drifted which a bond for Pakistan to be paid in
2037 and Pakistan was got four times over subscription at a price which
was only 300 basis points above the US treasury. Very few countries can
privilege to have that kind of credibility with international fund managers.
Though, in two years’ time we have missed that boat. Consequently, it is
imperative that we resume the journey which has been interrupted by
developing a stable, secure and non-violent political environment. The
political parties which come in power they instead of doing well for the
whole country they do good for their own particular areas that’s why
Pakistan is fronting with political instability.

The political instability is also playing its role in making the conditions of
economy even worse, as such variation in political and governing bodies,
corruption, and continuous and so vigorous change and amendments in
the policy of trading and producing has been continuously creating hurdles
in the way of progress and success of the economy (Liaqat, 2014).

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