According to a recent UNESCAP report Pakistan’s economy is expected to grow 5.1 percent in 2015. While that projection seems optimistic, the report also points out that macroeconomic fault lines would continue to create hurdles in the country’s economic growth.
The report has given due credit to declining inflation, rising worker remittances, better access to credit by the private sector and improved consumer confidence for higher growth in Pakistan. The report also forecasts that Pakistan’s industrial activity in 2015 will contribute handsomely to growth.
However, at the same time, the report has warned that poor domestic security conditions, unfriendly investment climate, and severe power shortages along with increasing circular debt and macroeconomic imbalances will keep the economy constrained. Similarly, while the report has praised the government for reducing the fiscal deficit with the help of 3G telecom auction and easy privatization transactions via the stock market, it has also blamed the government for not selling the state-owned enterprises which are in persistent losses, and for the state’s inability to increase the tax base and curb widespread tax evasion in the country. The report maintains that it will be very hard for the government to improve the fiscal condition of the country by cutting government expenditure due to the inflexible spending pattern, especially in debt servicing and defence budget.
Nevertheless, the UN’s Economic and Social Survey has recommended that the government must reduce poverty further, generate more jobs for a sustainable economic growth and cut spending as much as it can. The survey shows that the growth in the region’s developing countries would only increase to 5.9 percent in 2015 from 5.8 percent in 2014, and the survey has not observed any significant change in the near future.
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