Pakistan’s economy has witnessed a tremendous turnaround and is currently reckoned as one of the fastest growing economies in the region with countless investment opportunities.

All the international monetary institutions have praised Pakistan’s robust growth, helped by investment in CPEC as well as lower global oil prices.

Pakistan was on brink in 2013 when the power changes the hands and according to the IMF it was about to default. The energy crisis was at its peak and economic downfall was certain with the worse ever security situation and wave of terror engulfing the society. But credit goes to the incumbent government Pakistan’s economy has achieved sound footings as reflected by various economic indicators.

In 2013, law and order was alarming in the country, but now it has significantly improved due to prudent policies of the incumbent government.

Pakistan has made significant progress in regaining macroeconomic stability over the past three years. Pakistan has achieved macroeconomic stability in the past four years: the fiscal deficit has shrunken from 8 percent to below 5 percent, international reserves have tripled to over $18 billion, and the rate of growth has increased by a full percentage point to 4.7 percent.

The continuation of political stability and a predictable, orderly and constitutional transition of power from one government to the other would add a lot of strength to Pakistan’s economic prospects. The risks associated with an uncertain political transition process would be mitigated if different political parties take over the reigns of the government at predetermined regular intervals of time through fair and transparent electoral process. Fortunately, the thrust of economic policies of all leading political parties in the country is much the same but this positive aspect has been lost in the loud noise of political bickering, venomous rivalries and unwarranted accusations against each other. The links between political stability, economic growth and social cohesion are mutually reinforcing and need to be further nurtured and developed in Pakistan.

The strengthening of the economy is being attributed to phenomenal raise in the foreign exchange reserves, reduction in the fiscal deficit, structural reform, soundness of the banking sector leading to fall in the non-performing loans, fiscal consolidation, boost in the revenues and reduction in general government budget.

This reality has also been acknowledged by a number of other rating agencies like Moody’s, MCI and global lending institutions including IMF, World Bank and ADB besides internationally renowned papers like The Economist and Wall Street Journal have also from time to time been acknowledging the turnaround in the Pakistan economy, triggered by sound management of the economy by the PML-N government. In its latest assessment of Pakistan’s economy, Wall Street Journal said that poverty and terrorism in Pakistan were in decline, foreign investments have increased, as have consumer spending leading to a burgeoning middle class.

The government has vigorously pursued 4Es strategy: focusing on energy, economy, elimination of extremism and education. Structural reforms were introduced which included reducing untargeted subsidies and broadening tax base coupled with building foreign exchange reserves and curtailing inflation rates. Tax collections have increased by 60 per cent over the last three years, which is a complete break with the past.

Due to the prudent fiscal and monetary policies, Pakistan has witnessed good results which are evident in GDP growth rebound, low to moderate inflation, stable rupee and a remarkable increase in foreign exchange reserves.

Pakistan’s economy will continue to pick up during the current fiscal year as reform and stabilisation measures provide lift, with higher foreign exchange reserves, and softer inflation and oil prices also supporting the overall macroeconomic outlook. The implementation of structural reforms will consolidate recent gains in macroeconomic stability and improve the investment climate amidst the improving security situation, especially in Karachi.

Pakistan is facing serious problems of internal and external security. Law and order situation has worsened in some parts of the country more than others. A reversion to normalcy in the security conditions of the country would reassure the investor community and help the mobility of factors of production. Foreign buyers and technical personnel are reluctant to visit Pakistan at present. Improved security would allow their free movement in and out of the country.

Future economic prospects of Pakistan look promising but their actual realisation would depend upon a number of critical factors such as benign global economy, successful integration of Pakistan into the global economy, sound macroeconomic policies, strong institutional and governance framework, investment in infrastructure and human development and political stability. Under a constellation of these favorable conditions, it should be possible for per-capita income to double to $2,000 by 2020 and to reduce the incidence of poverty by half by 2015.

Pakistan needs to stay the course of macroeconomic and structural reforms, particularly in revenue collection, the energy sector, and in revitalising public sector enterprises that have been causing a fiscal drain. These reforms are critical for fiscal and economic sustainability and to promote investment and economic growth. The key challenges impeding stronger economic growth include inadequate infrastructure and transport connectivity, weak governance and institutions, and limited access to finance which hinders investment in key infrastructure. That in turn raises the cost of doing business, undermines productivity and hinders access to public services.

While the government is committed to its reform programme, implementation challenges that include resistance from various stakeholders could slow progress. In addition, domestic security concerns remain despite improvement, and natural disasters are a perennial downside risk.