Islamabad: The improved performance of Pakistan’s economy is real enough, “but it appears to be built on shaky foundations”, said a leading daily on Friday.
An editorial “State Bank’s scepticism” in the Dawn said that the first quarterly report of the State Bank provides a healthy corrective to the otherwise jubilant narrative being pushed by the government.
“Some success has indeed been achieved in stabilising the economy from the position it was drifting towards in 2013, but three years down the line, many of the underlying structural problems that keep pushing Pakistan towards crises on a cyclical basis remain in place.”
The report begins by acknowledging the positives that are there, such as an uptick in growth, decrease in the current account deficit, foreign exchange reserves rising to a level sufficient to finance seven months of imports, lower fiscal deficit and a shift away from government borrowing from the State Bank, and lowered inflation.
“These are considerable achievements, but their impact is diminished when one sees the list of what remains to be done.”
Widening the tax base and failure to reform public-sector enterprises come on top of the list of things on which progress has been slow or non-existent. They are followed by falling exports and dwindling foreign investment.
The government has targeted a growth rate of 5.5 percent for this year.
The editorial said that the State Bank is optimistic about the manufacturing sector, “but there are grounds to be concerned at the lopsided nature of the revival under way there, considering it grows out of factors that are either contingent or based on increased consumption and speculative activity”.
“The improved performance of the economy is real enough, but it appears to be built on shaky foundations. Sustainability remains a far-off goal,” the daily added.