Overview on Pakistan's Economy!

Pakistan is in the grip of a disastrous economic crisis. High inflation has destroyed the livelihoods of ordinary people, and there are widespread shortages of essential goods like food and fuel. Economic growth has also dropped dramatically. Pakistan's debt to other nations has increased, and the country has almost no foreign exchange reserves. So how did Pakistan get here in the first place? From 1960 to 1990, Pakistan was one of the economies in South Asia that grew at the fastest rate. Pakistan's political leaders have struggled for decades to effectively tax their population; currently, only one percent of Pakistanis pay their taxes, and the country has one of the lowest tax-to-GDP ratios in the world. This means that the government does not have the resources it needs to build infrastructure, provide health care, and generally invest in growing the economy. Corruption has also been a problem because the rich Elites who own a large portion of Pakistan's land and productive businesses also control the government, Pakistan has become more reliant on loans from friends like China and Gulf countries like Saudi Arabia and the United Arab Emirates to keep its economy afloat even at home political leaders racked up massive debts by spending heavily on welfare schemes however so long as foreign loans are coming in the country's leadership felt no need to undertake the difficult economic reforms.

Pakistan has struggled with a low-level economic crisis since at least the 1990s due to these factors. However, three events in recent years have transformed this crisis into a catastrophe: the first was the COVID-19 pandemic; despite the fact that Pakistan's economy had begun to recover following an IMF bailout in 2019, the country was severely affected by the pandemic; exports dropped by 50% and the country lost one third of its revenue; the country's economic growth rate turned negative; the poverty rate jumped.

Pakistan is heavily reliant on imports of energy and gets almost 40% of its supply from abroad. This rise in energy costs hammered the economy, causing inflation to double to 24.5 percent in December. Food prices have increased by 35 percent, making even basic commodities unaffordable for ordinary Pakistanis. This could also make the country's hunger crisis worse.

The International Monetary Fund is also said to give Pakistan a billion-dollar bailout in exchange for painful reforms to the country's economic system. However, it's unclear if anything fundamental will change in Pakistan since we've seen this movie before. The country's economy has repeatedly faced crises before inevitably receiving a bailout from the IMF. China and Saudi Arabia also responded to Pakistan's request for aid and will provide a reported 13 billion dollars in financial support.