Introduction

Historical Background
In 90’s under Ricardian era
Misunderstood by Keynesian period
Pakistani current Economic situation
Jim O'Neill ranking
Present economic situation
Challenges and prospects
Natural calamities
Earthquake
Flood
Poor Management
Macroeconomic problems of Pakistan
The next ten year
can make or break
How to solve
Taxation
Technology
Due to the emergence of 3G and 4G,
E-commerce market
Human Capital
demographic transition
youth bulge
Foreign entrants
Uber and Careem

In the nineties of the last century, Pakistan was still in the Ricardian era of
saving/investment deficiency rather than in the Keynesian period of idle capacity
and lack of effective demand, tried to promote economic growth through
consumption liberalization and cheap money policy, and landed the country in
double digit inflation, deeper internal and external debt and ultimate slowdown in
economic growth.

The economy of Pakistan is the 23rd largest in the world in terms of purchasing
power parity (PPP), and 38th largest in terms of nominal gross domestic product.
Pakistan has a population of over 207 million (the world's 5th-largest), giving it a
nominal GDP per capita of $1,641 in 2018, which ranks 147th in the world and
giving it s PPP GDP per capita of 5,709 in 2018, which ranks 130th in the world for
2018. However, Pakistan's undocumented economy is estimated to be 36% of its
overall economy, which is not taken into consideration when calculating per capita
income.
Pakistan is a developing country and is one of the Next Eleven countries identified
by Jim O'Neill in a research paper as having a high potential of becoming, along
with the BRICS countries, among the world's largest economies in the 21st century.
The economy is semi-industrialized, with centres of growth along the Indus River.
Primary export commodities include textiles, leather goods, sports goods,
chemicals, carpets/rugs and medical instruments

The present economic situation presents some opportunities for Pakistan. But the
country also has some serious long-term challenges. Unless the long-term
challenges are decisively tackled, such opportunities will only lead to sporadic
bursts of growth rather than a sustained upward trajectory. Some of the challenges
and prospects faced by Pakistan’s economy are Mounting debt,
Rising imports, declining exports,Excessive taxation and regulations,Lack of political
consensus, Low savings, consumption-oriented society, Lower investment and tax
collection, Increased government borrowing, Shrinking share in world trade,
Governance and implementation weaknesses and Uncertainty due to lack of
continuity of policies

Superimposed on man-made impediments to full exploitation of the economic

potential of the country have been natural disasters, like earthquake and flood,
which added to the economic misery of the ordinary people of Pakistan, damaged
infrastructure, contributed to budgetary weaknesses, pushed up prices and further
jolted the already fragile economy.
However, natural disasters are only a small part of the story. In fact, it can be
argued that flooding was directly linked with lack of long term economic planning
and inability of the top leadership of the country to develop a consensus for water
resource management, in particular building of dams. In the case of earthquake, if
large foreign aid flows were utilized effectively and honestly, the natural destruction
could be turned into an opportunity for economic betterment of the affected region.
Instead, mishandling of natural disasters, and reported misuse of funds collected to
help rehabilitate the disaster affected people and infrastructure, not only eroded
further the credibility of the government but also provided an additional proof that
bad governance was indeed the main cause of poor economic management of the
country.

Implementation of difficult policy choices, and not their diagnosis, is the real
problem of economic management in Pakistan. The main macro economic problems
of Pakistan are well know to even ordinary citizens and well articulated by
professionals. These are: slow and erratic economic growth, persistently high
inflation, extreme poverty of the bulk of the population coexisting with prosperity of
a few, deep and rising debt burden, and huge budget deficit.
The challenge right now is to contain the damage. We can only rebuild once the
extent of damage is ascertained
Economies, especially the sinking ones,are not saved by taking measures that
please and appease people. Measures that might irritate the public at large in the
present but give them relief in the future are the ones that will work.

The next ten years are very crucial as they could either ‘make or break’ Pakistan’s
economy. Pakistan was predicted to be world’s fastest growing Muslim economy in
2017 ahead of Indonesia, Malaysia, Turkey and Egypt. Despite rising economy,
Pakistan is still hampered by image problem. Pakistan needs to move along with
structural reforms by locating root causes of the problems and challenges its
economy faces.

For the past four years, Pakistan has witnessed 81 percent rise in tax revenue,
which is, seemingly, a big plus. Last year’s budget showed a 5.4 percent growth in
GDP, which is highest and the first time in over a decade. Allowing Federal Board of
Revenue (FBR) to work as an independent, impartial, transparent, accountable and
professional outlet will surely make this core institution a modern, effective and
efficient tax administration. Hence, this will induce taxpayers’ confidence in FBR,
which will lead to increase in tax collection in an equitable and fair manner.
Eventually, the greater the amount of finance available, the higher the chances of it
being allocated for the infrastructure development (roads, telecommunications,
water, sewerage). This will help create jobs, generate income for the millions and
trigger economic activity.

With the 10th largest labor force in the world, Pakistan has important strategic
endowments and development potential. One of Pakistan’s key strengths is the
demographic bulge especially growing proportion of young adults. Pakistan has
capacity to send across large number of young unskilled/semi-skilled people.
Having over 30 million plus population in the age group of 25-35, Pakistan can put
this valuable asset by imparting training in different technical fields to respond
market needs abroad.
Pakistan is currently passing through a demographic transition, which has resulted
in a ‘youth bulge’ (63% of our population comprising of youth, 69 million aged
below 15) and an increase in the working-age population as a share of the total
population. To reap the ‘demographic dividend’ of this change, the economy needs
to provide education and create productive and remunerative employment for
young workforce entrants. Foreign entrants such as Uber and Careem, through
their entry, have acknowledged the economic potential of a nation with young
population. Moreover, innovation through digitization and entrepreneurship are
playing their part in human capital development.
Due to the emergence of 3G and 4G, the size of e-commerce market, one of the
most important drivers of a digital Pakistan, is expected to grow up to US$1 billion
by 2018. Pakistan is making good progress on Business-to-Business (B2B) front as
software industry aims to achieve the goal of US$5 billion export mark by year
2020 through software development and service outsourcing.

Conclusion note
While there is an urgent need to fix pressing challenges, more deep-rooted reforms
are required to develop and attract talent to serve in the public sector and
businesses. Instead of politicians, the community leaders, academics and
intellectuals should come forward and play their role in societal transformation.