Pakistan's Economy Demonstrates Resilience Amid Ongoing Challenges

Islamabad: Pakistan's economy is demonstrating signs of resilience and gradual improvement, despite facing various challenges, according to a recent report by the Overseas Investors Chamber of Commerce and Industry (OICCI).

The OICCI Business Confidence Index revealed an uptick in business confidence, improving by four percentage points to -14% in March-April 2024 from -18% in October-November 2023. The sector-wise analysis showed mixed results: while the manufacturing sector's confidence declined to -15%, the retail sector exhibited significant improvement, rising by 16 points from -31% to -15%. The services sector also showed a modest improvement, with confidence levels increasing from -18% to -14%.

Majid Shabbir, adviser to the Islamabad Chamber of Commerce and Industry, provided insights into the economic developments. He noted that Pakistan's economic growth has been marked by volatility, characterized by periodic boom and bust cycles. These cycles have posed significant challenges to achieving sustained, long-term, and inclusive growth. "The root causes of this volatility are deep-seated structural issues that, when left unaddressed, contribute to unsustainable economic growth," Shabbir stated.

Despite tangible improvements in certain economic indicators, Shabbir highlighted that overall business sentiment remains cautious. This caution stems primarily from uncertainties surrounding political stability and the consistency of economic policies. He suggested that the government implement policies with broad political support to ensure consistency over time, regardless of changes in political leadership. "This can be achieved through bipartisan agreements and long-term strategic planning," he added.

Shabbir emphasized the need for further efforts to improve the ease of doing business in Pakistan. While there have been positive results from streamlining regulatory processes, reducing bureaucratic inefficiencies, and enhancing transparency, more needs to be done to create a more business-friendly environment. Addressing these issues would help reduce operational costs, foster innovation, and attract both domestic and foreign investment.

To bolster the economy, Shabbir suggested that businesses should be given export-oriented goals and incentivized to develop international markets. He also recommended the privatization of loss-making state-owned enterprises to enhance competition and improve their performance. Additionally, he stressed the importance of providing IT training to young graduates, enabling them to offer services to international clients. This could reduce unemployment and generate foreign exchange for the country.

According to OICCI Secretary General M Abdul Aleem, the recent improvement in the Business Confidence Index indicates a more optimistic business environment. This upward trend, though modest, is supported by factors such as improving economic growth, a stable exchange rate, and declining inflation.

The report underscores the importance of continued efforts to address structural issues and implement consistent policies to sustain the positive trajectory of Pakistan's economy.