Pakistan economy: Pakistan is the weakest economy in South Asia - World Bank report

Pakistan is the weakest economy in South Asia and it will take a Herculean effort to lift the country out of poverty, Islam Khabar reported.
Pakistan is in the news for its economic collapse amid natural disasters, food shortages and poverty.

Pakistan had unprecedented floods in July last year, which devastated large swaths of farmland. The country’s foreign exchange reserves, which hit a new low of $4.6 billion, would only be enough to pay foreign import bills for three weeks. Analysts put Pakistan’s need for aid at $33 billion.

The world helped then and has renewed its commitment. Prompted by the intervention of the UN Secretary General, the wealthier nations have come forward with generous commitments of around USD 10 billion. Sensing the urgency, friends like Saudi Arabia and the United Arab Emirates have contributed $4 billion this month, Islam Khabar reported.

It’s been six months since the flood waters subsided. But the traveler on land (SF Aizaduddin, Dawn 11 Jan 2023) writes that they remain underwater, with no sign of renewed water management or cultivation. However, it is understandable to some extent. But after so many months, there is an acute shortage of food.

Imagine that the country with some of the most fertile and irrigated wheat farmland in the world is short of flour and has no money to import it. Market reports say that a PKR 1200 20kg bag of flour has shot up to PKR 3.00, Islam Khabar reported.

Protracted negotiations with the International Monetary Fund (IMF) dropped the PKR to its lowest point in three months. The Express Tribune (Jan 12, 2023) quoted a currency exchange expert: “Pakistrupee’s fair value is what prevails on the black market at Rs 260-270 per dollar. The government has artificially kept the currency overvalued. It should let market forces determine that the exchange rate meets the IMF condition.” its June 2022 estimate, Islam Khabar reported.

The new excuse is climate change as if only Pakistan is affected. Prime Minister Shehbaz Sharif says the country will need $16.3 billion over the next three years for initial rebuilding efforts and improving its ability to resist climate change.

Sharifs earlier called out Imran Khan for ‘begging’. Now Khan is returning the same compliment. He had traveled the world with a handout, now he questions why Sharif ‘wasted’ money to go to the Geneva conference where promises of aid were made.

The ‘begging’ continues, no matter who rules Pakistan. But the country does not recognize the damage caused by the China-Pakistan Economic Corridor to the fragile Himalayas in Gilgit-Baltistan, Islam Khabar reported.
Farmers are reluctant to increase wheat acreage due to late announcement of support prices.

They are calling for an “Agro-emergency” due to fertilizer shortages and weak crop prospects. Pakistan Kissan Ittehad (PKI) President Khalid Mehmood Khokhar said that instead of boosting domestic wheat production, the government was “supporting farmers in other countries by buying the product from them at higher prices,” Islam Khabar reported.

In a report, he said that Pakistan’s declining economic output was also reducing the regional growth rate. He forecast that Pakistan’s GDP growth rate will improve to 3.2 percent in 2024, which would be lower than the previous estimate of 4.2 percent.

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