22PakistanA Land of Untapped Potential

Mohammad Shoaib and CFA

Chief Executive, Al Meezan Investment Management Limited

Pakistan enjoys strategic importance regionally and globally because of its key location at the crossroads of south Asia, central Asia, China, and the Middle East as well as its growing working population, rich untapped resources, and great trade potential. In spite of the developmental potential of Pakistan, it faces innumerous economic, security, energy, and governance challenges that impede its achievement of durable long-term growth and sustainability.

On the economic front, Pakistan has a number of factors in its favor. The nation is blessed with abundant arable land; about 25 percent of Pakistan's total land area is under cultivation and is watered by one of the largest irrigation systems in the world. A large population, around 190 million, provides Pakistan with a lot of labor capital. In spite of this, Pakistan's growth for fiscal year 2013 slowed to 3.6 percent in spite of monetary expansion. The problems of falling investment, excessive fiscal deficits driven by burgeoning public and bank debt, a low tax-to-GDP ratio, and falling foreign exchange reserves continue to weigh on the economy.

On the positive side, foreign direct investment rose, remarkably, by 76 percent in fiscal year 2013, for the first time in five years. This was accompanied by slowing inflation, rising remittances, and a narrowing trade and current account deficit. One of the biggest ...

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