Pakistan has important strategic endowments and development potential.

The country is located at the crossroads of South Asia, Central Asia, China
and the Middle East and is thus at the fulcrum of a regional market with a
vast population, large and diverse resources, and untapped potential for
trade. As per the most recent World Bank Report, issued on the 10th of
November in Karachi, Pakistans economic growth in fiscal year 2016
reached 4.7 percent which is the highest rate in eight years and a
significant increase from the previous years 4.0 percent.
Like other countries of South Asia, Pakistans growth was driven by
domestic consumption that continued to compensate for weak global
demand. Consumption contributed 93 percent towards a GDP of 5.5
percent. Comparatively, it is lower than other countries belonging to this
region for example India has a GDP of 7.3 percent. But it has undoubtedly,
started to catch up with its regional neighbours. In addition to this, it was
declared that the country had the highest rate of consumption but on the
other hand we witnessed the least amount of investments. Reason being,
as compared to the past year in which eurobonds were issued, net
unilateral transfers received by Saudi Arabia and 4g licenses were issued
on a large scale. No such investments took place in this year and hence,
the lower investment rates. Additionally, it was seen that CPEC made a
small contribution in growth.These low rates of investment continue to
constrain growth.
Government revenues increased by 20 percent due to an increases in
taxes but this has hurt business sentiments. Additionally, the industry
sector performed above expectations, making up for agricultures
underperformance. Contributing 21 percent of overall GDP, grew by 6.8
percent compared to 4.8 percent in FY15, surpassing the growth target of
6.4 percent in the FY16 Annual Plan. On the other hand, the service sector
has continued to perform consistently, contributing to the growth uptick.
Furthermore, this year our agriculture production (rice and textile) that are
our major exports declined because of low value of price in foreign market
(due to bumper crops), resulting in reduced competitiveness in the
international market. Also, Pakistans long term trade plummeted because

of infrastructure gap, poor trade facilitation, inefficient logistics and poor

investment climate.
Moving forward, the World Bank highlighted Pakistans success in reducing
poverty over the last decade and a half but contrasted this with the lack
of progress in health, education and nutrition outcomes since 2010. Based
on the revised poverty line adopted in early 2016, the percentage of
people living below the poverty line decreased from 64.3 percent in FY02
to 29.5 percent in FY14. But to make this growth matter, Pakistan needs to
invest its economic gains in health, education and nutrition. Malnutrition is
a particular concern, with Pakistan experiencing the third highest rate
stunting rate in the world. Despite of Pakistans recent growth followed by
a staggering fall in poverty, this growth has failed to be translated in
sustained improvements in wellbeing of people. I believe that Big push
model should be opted by the government to make huge investments in
order to curb and address malnutrition concerns. One of the reasons, this
issue is not being resolved can be the existence of coordination failure
between the federal and provincial governments. Syed Murad Ali Shah, CM
Sindh, urged the federal government to transfer more resources to the
provinces so that they could spend more on social sectors like health and
education. In order to achieve the eight millennium goals, it is essential
that the government invests abundantly in such sectors.
According to the Solow Growth model, it is wrong to say that we are
catching up with our regional neighbours because our consumption is
increasing and investments declining. This may be lucrative in the short
run but not in the long run. Because if the consumption keeps on
increasing with no increase in investments then growth would become
stagnant as we have not reached the steady stage yet. Hence, it is more
preferable that there should be an increase in investments rather than
consumption.
Another part of this report focused on the countries economic hub i.e
Karachi. There has been no development in Karachi since the past 8 years.
Surprisingly, 40 percent of people are deprived of clean drinking water
due to this it continues to remain among the bottom 10 cities in the 2015

Global Livability Index. Although it is the countries economic hub and a

strong industrial base, yet its infrastructure and institutions have failed to
keep pace with its physical growth. To make matters worse, the city is also
experiencing a water and sewerage crisis that stems largely from
governance shortfalls. Neither Karachi nor Sindh province have a formal
policy for water supply and sanitation.
To conclude, according to the report growth acceleration will depend on
the implementation of structural reforms, such as energy and taxation and
implementation of the China Pakistan Economic Corridor (CPEC). In the
long term, growth will be driven by increased investment in both physical
and human capital, with increased focus on better nutrition, health and
education outcomes. Moreover, the report projects that the pace of
Pakistans economic growth will accelerate to 5.4 percent in FY18. A
moderate increase in investment (related to CPEC projects) is expected to
contribute to an acceleration of growth, which will continue to be driven
by public and private consumption.