The economic policies in Pakistan are liberal, and since 1999, most of the regulations have been removed to facilitate foreign direct investment and capital flow. There are no restrictions on foreign direct investment, and the government is now free to accept up to 100% of a company’s equity participation.
Also, remittance of profits and dividends is unrestricted. Despite these positive changes, the country’s political instability, rising domestic insurgency, and endemic corruption have made doing business more challenging.
High fiscal deficits and low economic growth have hampered Pakistan’s growth. The government has encouraged foreign direct investment, allowing foreign companies to set up operations in any sector of the economy and remit profits without prior approval. Foreign companies can raise funds from the capital markets and domestic banks, and they are treated as equals to national firms. They can also hire expatriate staff to improve their operations.
In order to avoid such a situation, a new approach to public finance is needed to discourage the parking of capital in the real estate sector and ease financing constraints in the public sector. At the same time, the state must redefine itself as a facilitator, enabler, and regulator. The government’s intervention in the economy is justified for several reasons, including social protection for the poor and the provision of public goods. This government intervention is essential in the economy to avoid the pitfalls of destabilizing the country’s financial condition.
Situation of Current Economy of Pakistan
The recent increase in cash reserve requirements is a major reason for the slowdown in the country’s economy. By 2020, the per capita income of the middle class in Pakistan is expected to double and the country will be home to 50 million people. The middle class will be a vibrant part of the economy, with incomes comparable to those of some European countries. This is a positive sign for the economy, but a problem remains, as it is governed by competing interests.
Currently, the government is attempting to reduce inflation by ensuring that there is no hoarding of goods and services. The government aims to make sure that the currency doesn’t fall too much and that food prices remain stable.
Although there is a shortage of resources, the Pakistani economy is still growing at a slow pace. What is the economic future of Pakistan? para: The current situation in Pakistan is worrying. According to the International Monetary Fund, the country’s growth rate will be only 4 percent in 2022.
Its trade deficit is estimated to be $5 billion, and the rupee has lost 12 percent against the dollar since July. The country’s population is fast expanding. With this, the number of poor people is expected to double. Meanwhile, the diaspora has grown by 10 percent.
Despite this positive outlook, the economy is still under-developed. While tariffs have been reduced to an average of 16 percent, the country’s labor laws are not uniformly enforced and the economy is based on imports. The government’s regressive policies and a lack of a clear economic vision are contributing factors to the country’s under-developed economy. Its GDP per capita is only about 10% of the world’s population, making it a low-income nation.
The economy of Pakistan is undergoing a transformation. It is moving towards high inclusive growth, with an increase in foreign investment. The government is investing billions of dollars in infrastructure and has pledged $60 billion in China-Pakistan Economic Corridor projects.
In the next few decades, the economy will surpass India, and become the eighth-largest economy by GDP. The world’s third-largest economy will be India. The government is focusing on implementing structural reforms to improve the quality of life in the country.
The economy of Pakistan has recovered largely in recent years, despite the slowdown in the global economy. The recent growth rate, however, remains fragile. The country’s current account balance and revenue performance will determine the country’s economic trajectory in the short term. Further, Pakistan will also need to meet its IMF program commitments. The nation has also taken a significant step forward in the reform of the economy.