Stagnant growth

LAHORE: Pakistan needs high GDP growth to wriggle out of the current economic mess. A GDP growth of 2-3 percent hardly covers the yearly population growth of the country. Our regional economies Sri Lanka, Bangladesh and India have reached the next level.

Pakistan decades back was the fastest-growing economy of the region but even during high growth periods its social indicators were much lower than the other three countries of the subcontinent. Our low educational outcomes and weak health indicators kept our economy shaky depending always on foreign inflows. The other three economies continued investing in health and education even during decades of slow growth. That investment has finally paid them off. Sri Lanka despite recent economic turmoil stands a chance to bounce back because of its literacy rate of over 90 percent, infant mortality rate match that of developing economies and highest life expectancy in the region. Moreover it’s the most gender balanced country in the region. Its per capita income is still double than its three larger neighbors.

India has outperformed the regional economies after the 1990’s economic reforms. It is expected to be the third largest economy in the next ten years. It has reduced poverty appreciably but still needs a lot to lift over 60-100 million out of poverty. It is better than Pakistan in educational outcomes and health affairs but no way near Bangladesh and Sri Lanka. In fact despite robust growth its per capita income is less than Bangladesh.

Bangladesh has emerged as a role model for the developing world. From a basket case three decades back, the way it addressed its poverty is praised world over. Its population growth of 1 percent is only higher than that of Sri Lanka. Economically this country has done wonders in the textile field emerging as the second largest exporter of garments. It maintained a steady growth of over 5 percent even during deepest global recessions. It workers remittances are higher than Pakistan and its exports are nearly double than Pakistan.

All the four countries of the region are major players in textiles led by Bangladesh and followed by India, Pakistan and Sri Lanka. Sri Lanka produces the highest value added apparel in the region. Pakistan is the only country in the region that also assembles cars, tractors and motorcycles. It produces cement and sugar like India. Pakistan has the potential to move ahead in textiles, automobiles, cement and information technology. In textile it lags far behind Bangladesh and India, exporting lower valued products. It needs to invest more in the value added apparel sector.

In automobiles more localization is needed to make our vehicles globally competitive for exports. In 50 cc motorcycles Pakistan produces best quality at competitive price but there are impediments in exports that the government should address. The impediments are of the same nature as in information technology that have been recently addressed by the caretaker government. After removal of these impediments the information technology sector is well poised for rapid growth. Cement exports are on the rise.

But all these positive indicators are not enough to take Pakistan’s economy out of the wood. The government must prioritize education particularly in the TVET sector. The health issues need to be addressed prudently. For instance the issue of malnutrition could be solved at low cost through compulsory fortification of iron in our staple food the atta.