News update: – 20th December 2019, according to a recent update which shows Pakistan’s economy shows growth over 3.8%. But if the economy grows more than 3.8% annually without fixing existing structural economic imbalances, it finds a new Asian Development Bank’s (ADB) research paper.
If in the future; Pakistan needs to avoid the next balance of payment crisis. Hence, Pakistan will definitely have to fix the export and must reduce the dependency on imports as well.
These future predictions are written by the two authors in two economists Kristian Rosbach and Lilia Aleksanyan. Moreover “In the current structural and product specialization conditions, if Pakistan’s economy is to grow faster than 3.8% in the medium-term, external imbalances will occur,” predicted by the authors.
More from the book; a long-term structural BOP-constrained GDP growth rate of 3.77% for the period 1980-2017. At 4.89%, the average GDP growth rate for that period is higher than the BOP equilibrium GDP growth rate. Periods of GDP growth rates that are higher than the BOP-constrained growth rate have a tendency to to result in foreign exchange reserve weakening, followed by periods of economic and financial policy-led suppressed development.
After observing the 2013-18 period of high economic growth, Pakistan is again facing a balance of payments crisis, which forced the government of Prime Minister Imran Khan to sign a tough International Monetary Fund (IMF) deal that suffocated economic growth and is now causing an increase in poverty and unemployment.
In addition; They said that “In spite of important exchange decrease, merchandise exports declined by 2.2%, between the fiscal year 2017-18 and fiscal year 2018-19,”. While, Pakistan has lost in global market share by 1.45% per annum, with foreign exchange assets more declining from $9.8 billion at the end of FY2018 to $7.3 billion at the end of the Fiscal Year 2019, only enough to finance about 1.4 months of imports.
They also discussed in the book about Pakistan’s export performance which has been weak for decades. The Exports remain pretty low in market shares due to the growing quantity of unsophisticated export goods. We need more to work on Pakistan’s industry and diversify to help reduce the economy’s dependence on imports.
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