Deputy Chairman Planning Commission Sartaj Aziz on Tuesday said that the international rating agencies are optimistic about Pakistan's economic performance and are predicting Pakistan to emerge as one of the fast growing economies in the world in the coming years.
While addressing a conference on "Redefining prosperity paths in changing global economy: opportunities and challenges for Pakistan" organized by Pakistan Society of Development Economists, Sartaj Aziz said that the real GDP growth was 5.3 per cent in 2016-17 which is highest in last 9 years due to improvements in energy supply along with security situation, two key bottlenecks which were holding back the performance of the economy.
Pakistan's economy has seen noticeable turnaround in last four years as a result of cumulative impact of macroeconomic and structural reform program, he said and added as a result, deficit came down from 8% in 2012-13 to below 5 per cent in 2016-17 and inflation was brought to a single digit. Aziz also said that Pakistan successfully executed one billion USD 1 billion five years Sukuk and USD 1.5 billion ten years Eurobond transactions at a profit rate of 5.625 per cent and 6.875 per cent respectively and this reflects the confidence of global investors in Pakistan's economy.
In redefining paths for the future, Aziz said it is important to carefully analyze the dramatic changes that are taking place in the world economy as economic dynamism has shifted from advanced economies to emerging markets. While quoting example of Chinese economy, he said China is rebalancing its economy from manufacturing to services, investments to consumption, from exports to domestic services and this means slower but more sustainable growth path.
Moreover, the major economic powers including US and European Union are facing structural issues of aging populations, growing debts, weak financial institutions and global financial crisis which brought about a shift in policies that will allow a greater role to the public sector in steering the national economies, Aziz maintained. The deputy chairman said due to rapid transformation of the global economic order, it is necessary for Pakistan to reposition itself in the world economy and Pakistan's outlook for economic growth is favorable due to CPEC investments, improved availability of energy, and growth supporting structural reforms.
He further said Pakistan possesses fundamental advantages that can be harnessed to prepare the economy for leadership role in global economy by becoming a regional food basket and an engineering hub. Sartaj said now under CPEC there is great potential for industrial and agricultural development as both sectors are major contributors to Pakistan's GDP. Moreover, nine special economic zones along with CPEC routes would help both sectors increase their productivity as per their potential.
Sartaj Aziz in his concluding remarks said, "We need political stability, national unity and a sound macroeconomic policy framework to take full advantage of the opportunities." Earlier in his presidential address, Professor Dr Asad Zaman, President PSDE and Vice Chancellor PIDE, said that the global financial crisis of 2007 showed that there is something seriously wrong with the orthodox economic theory.
He said these problems have even been recognized by the leading economists of the world. He said that the problem started when morality was dropped from economics although, initially, economics was a moral science. He said that the alternative moral theories, which formed the basis of capitalism, were formulated based on the pleasure principle. Zaman said that the real issues cannot be tackled on the basis of monetary calculus alone.
Unfortunately, current economics is blind to the fact that economic policies affect human beings profoundly. He said that in order to understand and solve current economic problems, one must understand the historical contexts, which the orthodox economic theory does not take into account.
The remedy is to study historical, political and social contexts together with the economic aspects. Highlighting the problems with the traditional economic theory, Zaman said that people do not follow mechanical rules but they follow certain heuristics. Therefore, there is a need to build theory of human behavior that is not based on utility maximization, equilibrium and self-interest. He concluded by the saying that "We, at PIDE, are striving to reform economic theory that is cognizant of the flaws of the orthodoxy."
Secretary PSDE, Dr Ejaz Ghani presented the secretary's report and said that PSDE is the only professional society in Pakistan that provides a platform to economists and other social scientists of Pakistan. He said that the distinguished lecturers and presenters at this year's conference have come from around the world, including from Australia, Azerbaijan, China, and Brunei Darussalam. He apprised the audience that this year there would be 4 distinguished lectures, 5 panel discussions, and 3 parallel technical sessions in which 48 papers would be presented.
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