Reviewing Pakistan's economy: regional comparison is a thing of the past

Back in the 1990s, Pakistan used to compare itself to India. Its economic performance and potential were all touted as being comparable to India's – on a per-capita basis – and there were talks on how the two South Asian countries would be a force to reckon with in the future.

GDP per capita in both countries were in tandem, and economic growth figures close to each other. The Indian Rupee was stronger, but looked like within reach.

Fast forward just a couple of decades, and forget comparing Pakistan with India. Now, Bangladesh beats Pakistan's economy, and by a healthy margin.

What carries most irony in this scenario is the so-called usage of a phrase – do Taka (two Taka) – as means to disrespect the other party. A small fact-check: you need 4.4 Pakistani Rupees to buy two Bangladeshi Taka.

The reason why a currency is often used as means to determine economic health is to see what value is attached to it by other countries. In times of distress, the US dollar is mostly seen as a safe-haven asset — over most other currencies. Hence, its value is a matter of importance. Similarly, the movement of two currencies over time determine what value the market has attached to that store of value — the assumptions here being that the market has freely been able to decide the value. In Pakistan's case, one cannot say that with conviction.

Back to the matter at hand.

Recently, officials of a German textile giant advised Pakistan’s textile industry to follow in the footsteps of Bangladesh to enhance its safety standards, which could perhaps also increase the country's textile exports.

Also read: The fall of Dhaka was inevitable: now is the time for soul-searching

World Bank data says Bangladesh’s GDP has increased from $8.75 billion in 1971 to $416 billion in 2021. Pakistan’s GDP stood at $346 billion in 2021 after being ahead at $10.67 billion in 1971. So much for the size of the economy.

Another comparison: Bangladesh’s per capita income is $2,503 – over 60% higher than Pakistan’s $1,538.

Bangladesh’s foreign exchange reserves stood at $30 billion — roughly four months of import cover. Pakistan’s reserves stand at $6.7 billion — less than 1.5 months of import cover.

Pakistan has a population of roughly 225 million while Bangladesh is at 166 million. Life expectancy in Bangladesh is 73 years against Pakistan’s 67. In Bangladesh, 96% people have access to electricity while in Pakistan that number is 75%.

Bangladesh is also ahead of Pakistan on the UNDP Global Human Development Report for 2021-22. In the Human Development Index (HDI) ranking of 189 countries, Pakistan stood at 161 in 2021 with a score of 0.544. On the other hand, Bangladesh is placed at 129 with a score of 0.661.

Back in the 1990s, comparisons with India made sense. Later, a comparison with Bangladesh also did — but for a very brief period.

In the last decade or so, Pakistan has been left so far behind that the country is only mentioned in sentences that contain the words default, distressed debt, or economic crisis.

When businesses make pitch-decks, Pakistan's name is mentioned as an investment destination due to its young population and geo-strategic location.

What most don't mention is that very same young population is looking for jobs because, since 2005, Pakistan has had only one year of economic growth that was higher than 6% (using 6% as most experts see this figure as a sufficient number for the economy to grow and accommodate all the youth that enters the workforce each year).

But then again, not many have been making pitch-decks on Pakistan these days.

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