Pakistan’s lack of export competitiveness, chronic fiscal deficits, and low labour productivity are the root cause of the country’s sizeable macroeconomic challenges, the Asian Development Bank (ADB) said in a study ‘Pakistan: Reviving Growth through Competitiveness’, carried out in association of the Islamic Development Bank (IDB), released Monday.
The report that examines constraints to Pakistan achieving strong, sustained, and inclusive growth and proposes key sector reforms to boost the country’s economic competitiveness, suggested that Pakistan must take decisive reforms to free the economy from its binding constraints.
It notes that constraints were also imposed by weaknesses in finance and power sectors, mobilisation of resources through foreign direct investment (FDI) and domestic savings, education and health systems, and the management of urbanisation process.
“Policy makers and the government need to take a holistic approach to address the binding constraints preventing an improvement in labour productivity and competitiveness,” it states.
The report stressed the need for urgent reforms, warning that the ongoing pandemic would cause further damage to an already struggling economy.
“The pandemic is expected to further undermine the country’s already weak economic fundamentals, and the global economic fallout will affect the short to medium-term outlook for certain sectors,” it said.