Political instability

LAHORE: Political instability has always played havoc with the countries that faced it. Pakistan, Sri Lanka, Thailand and Argentina are few of the important countries where promising growth caved in after frequent periods of political uncertainties.

Political instability in Sri Lanka for instance has had a significant economic impact. The country’s tourism industry, which is the third-largest source of foreign exchange for the island country, has been hit hard due to the long-running civil war and political upheavals.

Additionally, the country’s investment climate has suffered due to the insecurity and uncertainty associated with the political situation, which has deterred foreign investment. The country’s economic growth rate, which was once one of the highest in the region, has slowed significantly as a result of political instability.

Sri Lanka still has the highest per capita income in the region, highest health indicators including lowest infant mortality rate, highest literacy rate, highest gender parity in the region, and the lowest population growth rates. All these indicators are considered ones that accelerate growth. But political strife and instability has devastated its economy.

Thailand is another example. The country is located in the fast growing regions of the world. Its neighboring economies like Indonesia, Singapore, Philippines and Malaysia are all growing at a fast pace.

But Thailand’s frequent political unrest has had a significant economic impact. Tourism, which is a major contributor to the country’s economy, has been badly hit by the frequent outbreaks of violence and unrest.

Additionally, the country's investment climate has suffered as investors are deterred by the instability and uncertainty. The country’s economic growth rate has been slower in recent years due to political instability.

Argentina is an important Latin American country that impacts the economy of the region. Argentina’s long history of political instability also has had substantial economic impact. The country’s economy has been characterised by high inflation, currency instability, and periods of recession.

Crude oil reserves in Argentina amounted to 2.48 billion barrels in 2021, up from 2.39 billion barrels in the previous year. Argentina has the fifth largest crude oil reserves in Latin America and the Caribbean.

The fastest growing export markets for crude petroleum of Argentina between 2020 and 2021 were United States ($496 million), Netherlands ($137 million), and United Arab Emirates ($76 million).

But political instability has hindered the country’s ability to attract foreign investment, which is essential for economic growth. Additionally, political polarisation has made it difficult for the government to implement long-term economic policies, further contributing to the economic instability. The country failed to exploit its actual economic potential.

Pakistan’s political instability has had a significant economic impact particularly during the past one year. The country has experienced frequent outbreaks of violence, including attacks on foreign businesses and government officials. This has deterred foreign investment, which is crucial for economic growth.

Despite heavy dependence on foreign aid, political instability has made it difficult to secure the necessary aid. The country has also struggled with high inflation and currency instability, further contributing to the economic challenges.

Coal, gold, copper, bauxite, mineral salt, chromite, iron ore, and a variety of other minerals and natural resources are among Pakistan’s vast reserves. Pakistan also mines ruby, topaz, and emerald, among other precious and semi-precious minerals.

Pakistan is plagued by low literacy rate, high population growth rates, and weak health indicators still in periods of political stability the country has kept pace with average growth in the region.