Thursday May 30, 2024

‘Country’s economy to grow at 2.3pc this year’

By Our Correspondent
April 19, 2024
People buy pulses and grains at a wholesale market. — AFP/File
People buy pulses and grains at a wholesale market. — AFP/File 

LAHORE: Pakistan’s economy will grow at a rate of 2.3 percent in FY 2024 while the low growth and high inflation will significantly increase poverty this year and in the coming years.

This was established by the economists Dr Moazam Mahmood, Seemab Sajjid and Amna Noor Fatima in presentation of their research here on the first phase of the annual conference on ‘Management of the Pakistan Economy’ organised by a private university. They showed that approximately 10 percent of taxes would have to be spent on transfers to lower income households to eliminate this poverty and that this would become larger over the coming years which implies that there must be a significant increase in transfers to households this year, through programmes like the Benazir Income Support Programme) and in the coming years to address poverty in Pakistan. Pakistan’s economy was projected to grow at 2.3 percent over FY2024.

Earlier, LSE Rector, Dr Shahid Amjad Chaudhry, opened the conference, by highlighting key policy messages that emerged from the 17 papers being presented. Dr Naved Hamid of the Lahore School of Economics and Dr Murtaza Syed of the Asian Infrastructure Investment Bank discussed how high interest rates are necessary to combat inflation. They addressed common arguments against and said that even if inflation was a result of supply-side factors and if government borrowing was relatively less responsive to high interest rates, one of the most important ways to curtail inflation is still through interest rates. They also discussed that interest rate changes would be critically influenced by the amount of the fiscal deficit and the level of international commodity prices.

Dr Rashid Amjad and Almazia Shahzad discussed how the stop-go cycle of economic growth in Pakistan is caused by unsustainable fiscal deficits coupled with foreign borrowing. They proposed that the only way to achieve growth and stability in Pakistan was to reverse the role of the federal and provincial governments. The federal government should concentrate on meeting the external financing gap, accelerate economic reforms and manage the fiscal deficit while the provinces should engine for growth and job generation. He said that the provinces to incorporate growth and job generation targets into their annual development plans and also engage in private public partnerships to increase productivity and growth. Dr Azam, Gul Andaman and Aymen discussed how the most binding constraint in Pakistan was stagnant exports and presented a proposal for an export-led industrial policy. Dr Theresa Chaudhry and Dr Nida Jamil discussed the role of trade and trade policy on CO2 emissions in the Pakistani textile sector.