ISLAMABAD: Pakistan can significantly accelerate its annual growth rate to as high as 8% if it doubles its investment and better utilizes its assets and human capital, according to Martin Raiser, the World Bank’s Vice President for South Asia.
In an interview with Bloomberg, Raiser emphasized the need for Pakistan to simplify its regulations and make its economic outlook more predictable to attract more investment. He stated that without a substantial increase in investment, the country would struggle to achieve its growth potential.
“If you invest 12% of gross domestic product (GDP), don’t expect miracles,” Raiser said. “You’re not going to grow. It’s as simple as that.”
Pakistan’s average investment-to-GDP ratio has been falling below 15% in recent years, the lowest in the region. As a result, the country’s economy is projected to grow by only 3% this year, according to a Bloomberg survey of economists.
The World Bank has recently approved a 10-year partnership framework for Pakistan, aimed at helping the government stabilize the business climate. Raiser stressed that creating a more stable and predictable economic environment is crucial for boosting investment and achieving long-term growth.
Pakistan has struggled with boom-and-bust economic cycles in recent years, driven by imbalanced fiscal policies and rising debt. A significant portion of government revenue is spent on debt repayments and defense, leaving little for critical sectors like health and education. Raiser pointed out that these challenges need to be addressed in order to unlock the country’s full economic potential.
Prime Minister Shehbaz Sharif has set a target of 3.6% growth by the end of June 2025, following the country’s narrow avoidance of an economic default last year. As part of a three-year loan agreement with the International Monetary Fund (IMF), the government has committed to raising revenue and restructuring state-owned enterprises to plug financial leaks.
Raiser also highlighted the need for Pakistan to increase its tax-to-GDP ratio to 15%. He called this goal “eminently doable” through measures such as reducing exemptions for special interests, cracking down on tax evasion, and modernizing the tax collection system through digitalization.
With reforms aimed at increasing investment and stabilizing fiscal policies, Pakistan has the potential to boost its economic growth and improve the living standards of its population.
Samra Zulfiqar, a real estate analyst at Zameen.com, is passionate about finding projects that offer buyers the best returns. Her keen insights spotlight the market’s most promising opportunities.
