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Pakistan's Economy: Room for Improvement?
2023 marked the year in which Pakistan faced its worst economic crisis, a crisis
which seems to only deepen in 2024.
Pakistan has taken its place amongst the list of nations in the world whose currency
has depreciated by over 20 per cent in the year 2023. The United Nations (UN)
report on World Economic Situation and Prospects 2024 has forecasted several
challenges including inflationary pressures, currency depreciation, and high levels of
sovereign debt would not see any progress in Pakistan's economic growth this year.
The average inflation rate in Pakistan sky-rocketed to 30 percent, this figure is
expected to remain at 20 percent in 2024.
Pakistan's economy is indebted with huge external loans, causing its economy to be
in a state of ‘paralysis’, a major catalyst of these external loans being China’s Belt
and Road Initiative. According to the State Bank of Pakistan, Pakistan is to pay
foreign loans worth USD 27.47 Billion by November 2024.
Analysts at Profit Pakistan Today, cited the Chinese loans as a major ‘obstacle’ for
the debt relief efforts. China accounts for 30 percent of Pakistan's external debt.
“The government is facing the daunting task of managing borderline unsustainable
debt, along with low SBP reserves”, said Ahtasam Ahmed, a sector analyst.
Dr Ikram ul Haq a lawyer at the Supreme Court, said the following while addressing
the country’s external debt,
“ Pakistan's real fiscal problem is reckless borrowing and ruthless spending, pushing
the country deeper and deeper into the deadly debt trap”
Pakistan's trade front remained dull in the last quarter of 2023 - showing no
improvement. The decline in trade deficit has also worsened the situation, there was
no increase in exports and rather a decline in imports. Raising the risk of the current
account deficit widening.
The World Bank has also highlighted basic problems of Pakistan such as the human
capital crisis, weak education system, ineffective human resource management and
the looming food crisis. Malnutrition is one of the biggest challenges facing the
country, with 80 percent of its children not receiving the adequate nutrition needed
for proper growth. Climate change also serves to be a major contributor to the issue,
the country’s agricultural sector remains at risk of non uniform rains. Upcoming
General elections in February, also play a crucial factor in deciding the future of the
country’s economy, a senior analyst stated the following “As the next election