Prime Minister Imran Khan has effectively led Pakistan through multiple crises in the last 4 years. Khan inherited dangerously low forex reserves in 2018 which are now at $23 billion, near the highest level in the nation's history. The COVID pandemic that hampered Pakistan's recovery has been handled well with the fully vaccinated rate for the eligible population at more than 75%. Not only has Khan deftly navigated his nation through these crises but his government has also revived the country's economy and grown exports by 26%. Domestic savings rate recovered to nearly 17% after plunging to a low of 12% in 2018. The year 2021 was a banner year for Pakistan's technology startups that raised over $350 million in funding, more than the amount raised in the previous 5 years. Manufacturing and construction industries are enjoying a boom last seen during the Musharraf years in 2000-2007.
Pakistan has pursued an independent foreign policy under the PTI government. The nation has maintained friendly ties with all great powers, including China, Russia and the United States, as well the Islamic world. At a recent OIC foreign ministers' summit in Islamabad, Chinese foreign minister Wang Yi attended and endorsed OIC's support for the movement for “right to self-determination” in Jammu and Kashmir.
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| Historic Inflation Rates in India & Pakistan. Source: World Bank |
Rising prices of food and fuel are still a major issue for the people of Pakistan and the rest of the world. Recent geopolitical crisis with the Russian invasion of Ukraine has only served to accelerate global inflation. It presents a serious challenge to the governments in Pakistan and elsewhere in the world.
Pakistan's opposition parties have recently come together to try to topple Prime Minister Imran Khan's government. These opposition parties have little in common other than their hunger for power. If they succeed, the country will plunge into yet another period of instability and uncertainty that will reverse progress made in the last few years to stabilize the country's economy.
For the first time in recorded history, the labor force participation rate in Pakistan is now higher than in India, according to the ILO/World Bank estimates.
Pakistan's Exports:
Pakistan's exports of goods and services have jumped 26% to $25 billion in the first 8 months of the current fiscal year, up from $20 billion in the same period last year. A key reason for recurring balance of payments crises and IMF bailouts has been the lack of growth in Pakistan's exports.
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| Pakistan Exports in First 8 Months (July 21-Feb 22) in FY 22. Source: Razzak Dawood |
The 26% export growth is particularly welcome after several years of stagnation seen during the PML N government of Prime Minister Nawaz Sharif.
Job Creation:
Pakistan’s economy created 5.5 million jobs during the past three years –on an average 1.84 million jobs a year, which is far higher than yearly average of creation of new jobs during the 2008-18 decade, according to the Labor Force Survey (LFS) published by the Pakistan Bureau of Statistics (PBS).
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| Pakistan Employment By Sectors. Source: Pakistan Bureau of Statistics |
For the first time in recorded history, the labor force participation rate in Pakistan is now higher than in India, according to the ILO/World Bank estimates.
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| Labor Participation Rates in India and Pakistan. Source: World Bank/ILO |
Unemployment rate in Pakistan is just 4.3% in spite of COVID19 pandemic. Jobless rate in India is 8%, much higher than in Pakistan.
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| Unemployment Rate in India and Pakistan. Source: ILO/World Bank |
Savings Rate:
Pakistan's domestic savings rate recovered to nearly 17% after plunging to a low of 12% in 2018. Savings are extremely important for increased investment to spur GDP growth in any country, including Pakistan.
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| Pakistan Savings Rate. Source: Global Economy |
IMF Bailout:
Pakistan's forex reserves were running dangerously low forcing the country to seek a $6 billion IMF bailout in 2018 to avoid default. The total reserves now exceed $22 billion.
Reko Diq Mining Deal Revival:
Prime Minister Imran Khan's government recently resolved an $11 billion in damages that the country faced for improperly canceling a huge copper-gold mining deal in Balochistan.
Reko Diq is the world's 4th largest undeveloped copper-gold porphyry deposit with over 14 million tons of copper and 21 million ounces of gold. The project was abandoned in 2011 after a Pakistan Supreme Court bench headed by former Chief Justice Iftikhar Chaudhry canceled the mining license granted to Tethyan Copper Company (TCC), a joint venture between Canada's Barrick Gold and Antofagasta Minerals of Chile. TCC challenged the cancellation in the International Centre for Settlement of Investment Dispute (ICSID). On July 12, 2019, the ICSID Tribunal awarded TCC $5.894 billion plus interest of $700,000 per day in damages against Pakistan. As of 1 March 2022, the award stood at $6.5 billion. The new agreement between Barrick Gold Corporation and the governments of Pakistan and Balochistan does away with this award. It also increases the share of the project owned by Pakistan from 25% to 50%, brings in $10 billion investment, the largest single investment in the country, and creates 8,000 jobs. Reko Diq is part of the Tethyan metallogenic belt (TMB) that extends from the Balkans in Europe to Pakistan including Serbo-Macedonian, Anatolian, Takab, Kerman and Chagai metallogenic belts. It is believed to be rich in copper and gold deposits.
Manufacturing and Construction Boom:
Large scale manufacturing grew by 8.2% in February 2022, after posting 7.6% growth during July-Jan FY22.
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| QIM Index 2019-22. Source: APP |
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| Pakistan Large Scale Manufacturing Index. Source: Mettis Global |
The LSMI Quantum Index Number (QIM) hit an all-time high of 136.2 points in January, 2022. It averaged 120 points during July-January (2021-22), up from 111.5 points during July-January (2020-21), showing growth of 7.6%, according to latest PBS data.
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| Cement shipments in Pakistan. Source: All Pakistan Cement Manufacturers Association |
Pakistan cement production has increased by double digits to respond to demand for housing and infrastructure construction on Prime Minister Imran Khan's watch.
Technology Boom:
The year 2021 was a banner year for technology startups in Pakistan. There was a 437% jump in investments in the startups, raising a total of $352 million across 72 deals in 2021, according to Aljazeera.
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| Pakistan Startup Investments. Source: Aljazeera |
Pakistan technology exports have soared 30% to $1.7 billion in the first 8 months of the current fiscal year, according to the State Bank of Pakistan.
Expansion of Social Safety Net:
Pakistan's PTI government has built South Asia’s first digital National Socio-Economic Registry (NSER) as a part of its ambitious effort to build a basic social safety net. The Ehsaas (also known as BISP- Benazir Income Support)) program's socio-economic registry includes household information by geography, age, income, education, health, disability, employment, energy consumption, land and livestock holdings etc. Ehsaas Programs include both Unconditional Cash Transfers (UCT) and Conditional Cash Transfers (CCT). Unconditional Cash Transfers are made only to people living in extreme poverty or distress. Conditional Cash Transfers like Waseela-e-Taleem and Nashonuma are given for education and nutrition respectively. In addition, there are feeding centers (langars) for the hungry and shelters (panahgahs) for the homeless.
OIC Foreign Ministers in Islamabad:
Recent conference of Islamic countries foreign ministers hosted by Pakistan in Islamabad was attended by 56 nations. Chinese foreign minister Wang Yi attended as a special guest. Here's an excerpt of the Islamabad Declaration issued at the conclusion of the two-day conference:
“We declare that the final settlement of the Jammu and Kashmir dispute in accordance with UN Security Council resolutions is indispensable for durable peace in South Asia. We reiterate our call on India to: a) reverse its unilateral and illegal measures instituted since 5th August 2019; b) cease its oppression and human rights violations against the Kashmiris in IIOJK; c) halt and reverse attempts to alter the demographic structure and to redraw electoral constituencies in IIOJK; and d) take concrete and meaningful steps for full implementation of the UN Security Council resolutions on Jammu and Kashmir,”
Response to Indian hostility:
Prime Minister Imran Khan's government won praise for its handling of India's aggression with unprovoked air strikes in Balakot in February 2019. Pakistan responded with "Operation Swift Retort", shot down two Indian fighter jets and captured an Indian Air Force pilot. But Khan's government avoided further escalation of the incident. Similarly, Pakistan responded calmly to the "accidental firing" of Indian Brahmos cruise missile into Pakistan that could have easily escalated into a full-scale war between two nuclear-armed neighbors.
No-Confidence Vote:
Pakistan's opposition parties have recently come together to try to topple Prime Minister Imran Khan's government. These opposition parties have little in common other than their hunger for power. If they succeed, the country will plunge into yet another period of instability and uncertainty that will reverse progress made in the last few years to stabilize the country's economy.
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