$1tr economy targeted in 2035
The National Economic Council (NEC) on Tuesday approved Pakistan’s Economic Outlook 2035 to increase the size of the country’s economy to $1 trillion and reduce poverty by 15% – ambitious goals that cannot be achieved without political stability.
Planning Commission documents paint a bleak picture of Pakistan in 2035, if new goals are not achieved and political leadership fails to ensure stability in the country. by Prime Minister Shehbaz Sharif, the NEC, the constitutional body that approves macroeconomic plans, endorsed the Pakistan Economic Outlook framework 2035.
It also approved its 2023-2024 plan, setting a gross domestic product (GDP) growth target of 3.5% for the next fiscal year and an inflation target of 21%.
“In business as usual, economic growth will be 3.5% even after 12 years,” said Ahsan Iqbal, Minister of Federal Planning, after the NEC meeting. The minister said in the absence of reforms, the size of Pakistan’s economy will be $573 billion by 2035 and “this could almost double to $1 trillion, if we introduce reforms today”.
During the current fiscal year, the economy grew by only 0.29%, which is also controversial, and the size of the economy is only $341.6 billion. Political instability, rapid population expansion, an abundance of underserved young people, loss of labor base and lack of sustainability of policies remain key challenges.
In the no-adjustment scenario, imports are shown at $109 billion, which in the transition scenario could increase to $200 billion due to imports of advanced industrial goods. “If we cannot increase exports to $100 billion in the next eight years, Pakistan will not take off and remain stuck in a debt trap,” said Ahsan Iqbal.
Without a significant increase in exports, the overseas sector is likely to remain volatile, with negative consequences for debt, demand and the exchange rate.
According to the strategy paper, without structural changes, Pakistan will have 40% of its population below the poverty line. An additional 8 million children will create a need for an additional 250,000 primary schools at current enrollment levels. Unemployment can be reduced by about 5% and poverty by up to 15% by changing the direction of the economy. The current increase in population also requires increasing the capacity of public institutions to ensure good governance.
