The coalition government of Pakistan Muslim League Nawaz (PML-N), Pakistan People’s Party (PPP) and other allies brought the economy to the ICU. Global rating agency Fitch predicted the growth rate to be only 0.2 per cent in the current fiscal year 2022-23.
It should be noted that in the economic survey released for the financial year ending June 2022, the government admitted that the growth rate was 6 per cent in the PTI government.
International Rating Agency Fitch has lowered Pakistan’s 🇵🇰 GDP Growth Rate forecast to just 0.2% for this year FY 2022-23 from 6% last year under PTI Government.
Pakistan is paying a huge cost of regime change operation against Imran Khan. pic.twitter.com/YQk5ofnqqo
— Musa Virk (@MusaNV18) September 15, 2022
The alarming economic collapse was predicted following the worst flood disasters in Pakistan.
Economic analysts termed the international rating agency’s report a considerable alarm for the coalition government and its handlers. Analysts say that the political parties criticising Pakistan Tehreek-e-Insaf (PTI) and its government for the last 4 years without any reason have harmed every aspect of the economy and poorly performed worst in the sector.
Experts say that political instability is the main reason for the destruction of the economy, despite all efforts, the coalition government has failed to eliminate uncertainty from the market, which is the reason why the pressure on the rupee remains despite the revival of the IMF program.
The disastrous flood in the history has hit the country, as a result of which 90 per cent of the crops including cotton have been destroyed in Sindh, the effects of which will come in the form of further economic destruction in the coming months.
Analysts say that the only solution to economic recovery is political stability, which is possible only as a result of early general elections. The incumbent government and its handlers should now think about ending the political and economic instability at the earliest by announcing early general elections.
Earlier, economists raised questions about whether the finance ministry will change its economic targets after analysing the flood disasters across Pakistan.
A document of the finance ministry showed that the floods force the government to revise the GDP target as it will be lower than expectations of the International Monetary Fund (IMF). It was predicted that the GDP will be recorded at around 2.3% in FY23 as compared to the IMF’s forecast which was 3.5%.
It further stated that the losses due to the flood will be around $9.3 billion or Rs2,022 billion, whereas, severe damages are expected to crops in Sindh, Balochistan and Khyber Pakhtunkhwa (KP) as the recent flood shook the agriculture sector. The Agri sector growth is expected to decelerate by 0.7% from the annual plan of 3.9%.
The industrial sector growth is estimated to come down by 1.9% from the annual plan of 5.9%, whereas, the pos-flood growth of services is expected to be 3.5% against the target of 5.1%.
Inflationary pressure is still persistent and with supply glitches due to communication failures that will further aggravate, the ministry analysed. It added that despite approval from the IMF, external woes are not yet over and the liquidity position needs to be strengthened with the help of friendly countries.
A few days ago, Finance Minister Miftah Ismail told Bloomberg that the inflation rate will be 15 per cent in the current fiscal year, whereas, it was inevitable to ban imports of luxury items for a long time.
“I want to see a Pakistan that lives within its means. That’s it,” Ismail, 57, told Bloomberg News. “Nothing can happen in one year, but we can start.”
The outlook has been further complicated in the aftermath of historic floods, which could have an economic impact of at least $10 billion, adding to a list of problems for Ismail that includes political turmoil and raging inflation.
Less than a week ago the International Monetary Fund gave Pakistan a $1.16 billion lifeline to avoid an imminent default. Pakistan also secured pledges for a total of $9 billion in investments and loans from Qatar, Saudi Arabia, and the UAE. Ismail said he expects a $1 billion investment in listed state-owned companies to materialize in about a month.
Ismail expects economic growth of more than 3.5% for the fiscal year that started in July, down from an initial target of 5%. He predicts that inflation, running at the highest in 47 years and the second highest in Asia, is close to its peak and will average 15% for the year.
Pakistan’s export revenue is dominated by textiles, and much of its cotton crop was washed away. The government will allow the textile industry to import as much cotton as it needs to keep the looms running. Islamabad is now also importing tomatoes and onions from Afghanistan, Iran and Turkey after shortages shot prices higher, Bloomberg reported.
Economists say that the federal government will have to change its economic targets to avoid further financial woes in the future