It has now been almost a year since the hotly contested elections of 2024. The federal and provincial governments both seem settled in with their directions for the next 4 years set and in progress. Presenting performance so far and what lies ahead is the most crucial role of media and those associated with it and the reason why this institution is considered a pillar of democracy despite its massive flaws and failure to perform it in several cases. Analyzing each provincial and the federal government performance so far can help voters make better choices in the elections to come by keeping them informed and safe from the misinformation that plagues our landscape and threatens the democratic process across the globe. This article focuses on the federal government first, analyzing its’ performance based on the key economic indicators since it is the economic policy of the federal government that is the main concern of the people. The four key economic parameters are GDP growth, Interest rates, Current account and inflation.
To start with, inflation was the biggest concern and the most talked about topic heading into the elections in 2024 with Pakistan having just come out of an economic crisis that had seen inflation rate hit 38% and persistent double digit inflation for years. It was the topic of every talk show and news headline and many attributed the expected weak electoral performance of coalition setup to it. Key inflation numbers have all declined back to single digits and are some of the lowest in past decade as per latest data. Consumer price index, a key measure is now 4.1% as per December 2024 data, highlighting its fall from the 38% figure talked about earlier. The Sensitive Price Index which measures inflation for commodities most critical to general population also showed a rate of 4.2% for December 2024 highlighting even greater improvement. Wholesale Price Index also showed a figure of 1.9% for December 2024 highlighting improvement in the production and distribution side as well. Rural inflation where the most underprivileged of our society normally live has also been consistently lower then urban inflation. Total inflation for the 6 months of current fiscal year has been 7.2% highlighting its return back to low single digits for this fiscal year. It can be safely said that so far the government has been succeeding on this front.
GDP growth is a key component of a healthy and growing economy highlighting, not necessarily but usually, a successful economic policy by the government. GDP growth in most cases leads to improvement in jobs, wages and standard of living of most residents of the country. GDP growth of more than 6 percent historically has been achieved in Pakistan at the expense of our current account and has ended with a recession and a currency crisis over past 10 years. Pakistan has thus been trapped in cycles of boom and bust with stable growth not seen. Currently our growth is projected to be 3.2 to 3.4% by multilateral organizations for current fiscal year which is less than ideal given our population growth and the even lower growth we have experienced past few years. However it must be remembered that the current growth does not come on back of a boom and bust cycle with our currency completely stable for past 18 months after a 15% appreciation roughly and our current account positive with no foreign debt repayment issues being encountered unlike the previous two cycles. This time our foreign reserves have also not dwindled and have been on the rise approaching the three month import cover requirement expected of us by multilateral institutions. Thus while there is room for improvement with regards to GDP growth so far the government has done okay with expectations of greater rates in future a just demand.
Our current account figures have also been in positive with six month figure approach 1.2 billion dollars highlighting growing exports and manageable imports with increased foreign remittance and investment in the country. This has been made possible due to exports crossing 20 billion dollars for the first six months of current fiscal year with expectations for record exports in country’s history should the trend hold for another 6 months. Imports have clocked in at 33.3 billion dollars for same period highlighting that policy of choking imports is no longer being followed. Remittances during this period have also shown huge upward movement approaching 18 billion dollars for first six months and also expected to break all records should trend hold. Foreign direct investment touched 1.88 billion dollars in same period with outflows of 554 million dollars highlighting net gains though amounts much larger would be necessary to propel growth forward.
Interest rates have also been showing a big decline since the start of current government, falling from 22 percent to 13 percent with further decline expected in coming months. This is relevant because at higher interest rates loans for industry become unattractive effecting growth and employment opportunities. Furthermore investors shift entirely to attractive savings accounts or government securities leading to decline in availability of capital for private sector. This has effects such as lower GDP growth, higher unemployment etc. whereas lower interest rates normally lead to higher lending to private sector fueling growth, wages and jobs. Interest rates are also tied to currency stability which is why they were kept high to prevent depreciation but now with higher inflows such a policy is no longer necessary.
In conclusion, performance of current government on economic front has been satisfactory so far. AS of now, country has come out of the possibility of default and is by large heading in right direction, but there is still much more to be done to bring about solid, sustainable economic progress which would translate into further benefit for the masses.
