"The country's long term growth depends on the investment in its people and this is what that will make growth better for Pakistanis," according to the "Pakistan Development Update Fall 2016," report presented by the World Bank in collaboration with Shaheed Zulfikar Ali Bhutto Institute of Science and Technology (SZABIST) at a hotel, here on Thursday.
The report said the government's next challenge would be the investment in health, education and nutrition. It mentioned Pakistan's growth began upward trend as compared to many of its regional neighbours in FY16 with gross domestic product (GDP) expanding at 4.7 percent that is the highest rate in eight years and a significant increase from 4% rate previous year. While India's growth (7.6%) continued making it top leader in South Asia, Bangladesh and Pakistan began to strengthen as far as other South Asian countries were concerned.
The South Asia region grew by 6.8 percent year-on-year in the second quarter of 2016, continuing to outpace East Asia and the Pacific (6.3 percent) while other regions experienced slow or negative growth. Amidst an environment of soft global demand, the report highlighted that Pakistan's growth in FY16 was driven by strong aggregate domestic demand and improvements in business sentiments that were evident in private sector credit growth of 12 percent, expanding by Rs 461 billion in FY16 as compared to Rs 224 billion in the preceding year. Low inflation and low interest rates also contributed to higher credit growth.
The report said the low and stagnant investment rate, however, continues to significant challenges as after strong growth in FY15 of 13%, investment grew by only 5.7% in FY16. The figures in the report reflect that FY16 saw continuation of longstanding decline in Pakistan's share in global trade. This trend is combined reflection of Pakistan's weakening export competitiveness and soft global demand in key sectors. Food and textiles, in particular, are key contributors to Pakistan's exports and continue to suffer from a decline in international prices and demand.
"The simple average tariff has fallen only slightly from 14.4 percent in the fiscal year 2013 to 13.4 percent in the financial year 2016," the report said adding that the budget deficit has shrunk as revenue growth has outpaced expenditure growth. Pakistan's recent growth has been accompanied by a staggering fall in poverty but growth and poverty reduction have not translated to sustained improvements in the wellbeing of people.
Speaking to a gathering at the launch of the report, chief minister Sindh Syed Murad Ali Shah said his government had joined hands with private sector for the improvement in education and health sectors in province. He said law and order situation was improved in the province under the National Action Plan (NAP). He said targeted operation against criminals in Karachi had brought peace in the city. Murad said Sindh government would improve the infrastructure in city.
In his welcome remarks, Country Director of the World Bank Patchamuthu Illangovan said Pakistan had bright prospects of economic development. Dr Azra F Pechuho, Chancellor SZABIST, Muhammad Waheed, a senior economist and Task Team Leader PDU Fall 2016 and some others also spoke.