Pakistan's economic woes are being overlooked

By Bruce Stokes

Pakistan is a country beset with political difficulties, but they could be of secondary importance to its economic woes. While much attention has been devoted to the dramatic Supreme Court move to order the arrest of Prime Minister Raja Pervez Ashraf on charges of corruption and recent large-scale protests led by populist cleric Tahirul Qadri to demand the resignation of the government ahead of elections due in May, the country's financial difficulties have been overlooked. Likewise recent deadly militant bombings have also distracted attention, as have skirmishes with India on the Line of Control (LoC) that divides the disputed Kashmir region. These headline-grabbing events have not only served to obscure the profound economic challenges facing Pakistani society but in many cases have also nurtured and aggravated them.

'Deteriorating economy'

The truth is that the Pakistani people are deeply troubled by the plight of their economy and their own economic prospects. With the government likely to ask the International Monetary Fund this year for a new aid package, the nation's economic plight may soon become topic number one in the global discussion about Pakistan's future. "Deep seated structural problems and weak macroeconomic policies have continued to sap the [Pakistani] economy's vigour," the IMF's executive board concluded in late November. Economic growth over the past four years, after adjustment for inflation, averaged 2.9% annually, and is projected to be only 3.2% in 2012-13. That, says the IMF, is not sufficient to achieve significant improvement in living standards and to absorb the rising labour force. All this at a time when prices are rising about 11% per year. Moreover, the government deficit was 8.5% in the last fiscal year and press reports suggest it may miss its budget deficit target this year by a significant amount. The IMF expects foreign reserves this fiscal year to be half what they were just two years ago, a sign of waning investor confidence and a deteriorating international economic situation. Hardly surprising then that the Pakistani people are extremely downbeat. 'Personal pain' Roughly nine out of 10 say the economy is bad, including a majority (64%) who think that it is very bad, according to the 2012 Pew Global Attitudes survey. Just 9% rate the economy positively. There has in fact been a sharp decline in economic ratings in Pakistan since the beginning of the global economic recession. In 2007, 59% said the economy was doing well; by 2008, this percentage had dropped to 41% and has continued to fall since then. A plurality (43%) believes the economy will only worsen. For many of them, this pain will be felt personally. Their assessment of their own personal economic situation is down 19 percentage points since 2008, one of the largest fall-offs among the 15 countries for which the Pew Research Centre has comparable data. Only 38% say they are better off than their parents. More than half (57%) say they are worse off than five years ago. And 65% say it will be very difficult for their children to

advance economically.

Unemployment is one of the public's major concerns. Nine out of 10 people say that the lack of jobs is a very big problem, a more important issue to them than concern about corrupt political leaders or unrest in Kashmir. However because the survey was conducted in the spring of 2012, it could be that concern about Kashmir has risen more recently because of flare-ups in January along the LoC. While it is true that issues of life and death and war and peace will always trump economic news, the dire nature of Pakistan's economic problems could ultimately feed political and social unrest as the regional and global discussion about Pakistan's future moves to centre stage. Polling suggests that the people of Pakistan may say this refocusing is long overdue.