Pakistan's economic growth has been volatile over the past half century, affected by frequent political instability, geopolitical factors and balance of payment crises, says Asian Development Bank (ADB).
The Bank in its latest report "Asia's Journey to Prosperity Policy, Market, and Technology over 50 Years" stated that with electoral democracy now taking root, the new government under Prime Minister Imran Khan is taking on a wide range of structural reforms with the help of an IMF program in 2019 complemented by financing from the ADB, the World Bank, and some bilateral partners.
These reforms cover consolidating fiscal conditions, strengthening corporate governance of SOEs, and improving the investment climate. It is hoped that these reforms will address the chronic balance of payment problems and build more sustained and stable growth, said the Bank.
The report further stated that implementing these structural reforms proved difficult. Pakistan continued to suffer from rising public debt and frequent balance of payment difficulties in the 1990s. There was another military takeover in 1999. The country enjoyed a period of high growth from 2001 to 2006, partly due to large foreign aid associated with the war against terrorism. But the oil price shocks of 2007-2008 hit Pakistan hard, and it had to enter into multiple IMF programs in the following 10 years to stabilize the economy.
After 2010, the pace of growth gradually picked up, partly supported by increasing FDI, especially as economic growth, however, slowed sharply from mid-2018, following fiscal and monetary policy tightening to rein in high and unsustainable twin deficits.
In 2017, the largest source of outward migrants in Asia and the Pacific was India (accounting for 19.6% of the total), followed by the PRC (11.5%), Bangladesh (8.6%), Pakistan (6.9%), the Philippines (6.6%), Afghanistan (5.5%), and Indonesia (4.8%). The growth in outward migration was mainly from Asia to non-Asian countries. The stock of Asian outward migrants residing or working in Asian countries increased from 22.9 million to 30.2 million.
Among the top 10 remittance-recipient economies globally in 2018, five are in Asia-India ($78.6 billion), the People's Republic of China ($67.4 billion), the Philippines ($33.8 billion), Pakistan ($21.0 billion), and Vietnam ($15.9 billion). Together, they received $216.8 billion in remittances in 2018, or 31.4 percent of the global total. For many economies in Central Asia and the Pacific, remittances are large as a ratio to gross domestic product - over 30 percent in Tonga; at least 10 percent in Kiribati, the Marshall Islands, and Samoa; and around 30 percent for the Kyrgyz Republic and Tajikistan.
Economies in South Asia (Bangladesh, India, Pakistan, and Sri Lanka) leaned more toward socialist policy with greater reliance on state owned enterprises (SOEs), state control over industries, and an inward orientation that restricted trade and foreign investment. On the other hand, many economies in East Asia and Southeast Asia leaned more toward market-friendly policies, greater reliance on the private sector, and an outward orientation that promoted trade and attracted foreign investment.
The ADB's support to social protection, health and education remains crucial. In Pakistan, the ADB financial support to the national Benazir Income Support Program substantially increased the issuance of computerized national identity cards and cash cards for poor women, enabling them access to financial services for the first time.
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