Growth by Other Means
There is plethora of reasons for meek economic growth in Pakistan. Instable law and order situation is the most lethal one. Because of terrorism related incidents, Pakistan’s economy has slowed down, the Rupee has been devalued, interest rates have gone up and there has been some increase in the rate of inflation in the country.
Security stability is a pre-requisite for conducive investment environment in a country. A favorable business environment attracts foreign direct investment (FDI) inflows as well as enhances domestic investment in a country. One of the key reasons for heavy investments in developed countries’ markets is their stable security conditions. In other words, if there is plenty of FDI coming in, it means country has security conditions, clear government rules and regulations, transparency, and political stability.
Pakistan is a state that has been enduring the effects of these menaces for decades. Among these factors, the scourge of security instability, political instability, and corruption and energy crises has remained more influencing on foreign investment inflows as well as economic growth in the country. Subsequently, economic losses, such as low GDP, low FDI inflows, high unemployment, poverty and inflation, etc. resulted in economic losses in Pakistan. Despite all these hurdles; nevertheless, Pakistan still has great investment potential because of its natural resources and paramount geographical importance in the world.According to numerous statistics, “Pakistan's economy is considered as the world's 27th largest economy in terms of PPP.”Moreover, Pakistan’s economy is mainly agrarian; nevertheless, other sectors such as service or industrial sector are on progressive mode since 2013-14. Though economic growth began in 2013-14 in Pakistan, it accelerated in the year of 2014-15 mainly because of the factors, such as momentum in reform initiatives, the war on terrorism, commitment to fiscal and monetary management rectified and improved overall macroeconomic situation. In similar manner, the flow of FDI in Pakistan will increase with Pakistan’s successful avoidance of Financial Action Task Force (FATF)’s blacklist and restoration of Islamabad’s status as family station for its international staff on improved security situation.
Restoration of Islamabad’s status as United Nations (UN)’ family station is proof of improved security situation in the country. According to Foreign Minister Shah Mehmood Qureshi,“the UN decision to restore Islamabad’s status as a family station for its staffers is reflective of Pakistan’s improved law and order situation, for which the country's security agencies and Foreign Ministry deserved appreciation”.
Together with the already liberalized visa regime of Pakistan, UN’s decision will definitely help the country in getting foreign investment, increase in economic activity and will also help in trade and tourism with other countries.
Moreover, United Nations' decision augments its determination in further securing security environment in Pakistan. "Pakistan welcomes the United Nations' decision to restore the status of Islamabad as family station for its international staff, after a comprehensive review of the security situation," Foreign Office said in a statement. In other words, it is a rightful acknowledgement of the turnaround in the security environment in Pakistan.
With this big achievement, international organizations are now more confident in increasing investment in the country. "This decision reflects confidence of international organizations in Pakistan," Pakistan’s Foreign Minister said, adding that the UN decision will help build trust as well as increase investment in the country. He pointed out that after the 2008 bombing of a five-star hotel in Islamabad; there were apprehensions among various foreign missions and the offices under the UN about the security situation. During the period, according to many media reports, the Foreign Office remained in close touch with the UN and urged the international body to review its decision as soon as the security situation improved as a result of the defeat of the terrorists. "After the comprehensive review of the security situation by the UN itself and agreeing to Pakistan's assessment of the situation, the world body finally announced through a notification that Islamabad's status was restored," he added.
It is hoped that the UN's decision and Pakistan's liberalized visa policy would further contribute to economic activities in the country. "This is very good and positive news on which I would like to congratulate the Foreign Office and the entire nation," Mr. Qureshi concluded. This is a very welcome step for Pakistan. Pakistan needs to continue its efforts in further improving security situation as stable law and order situation is a must for economic growth in Pakistan.