HomeAsiaPakistanPakistan’s investment-to-GDP ratio lowest among regional countries

Pakistan’s investment-to-GDP ratio lowest among regional countries

KARACHI-The Pakistan Business Forum (PBF) says investment-to-GDP ratio in the last fiscal year stood at 13.6 per cent, lowest among the regional countries. This ratio stood at 15.6pc in 2021-22. The per capita income decreased from $1,765 to $1,568 in 2022-23. This deceleration was attributed to the significant depreciation and a contraction in economic activity. Talking to media, Vice President and Chief Organiser, Ahmad Jawad said we need at least $30 billion annually for international debt servicing in the foreseeable future. Therefore, the question on everyone’s mind is how future governments will be able to meet their payment obligations in the years to come. Pakistan envisages developing its domestic industries by helping various foreign companies set up operations and attracting diverse investments from abroad. He pointed to the country’s population of well over 220 million as an attractive factor. “For any company, the market is there,” he said, “the consumer is there.” Similarly Pakistan “needs other partners” to balance its trade deficit with China and reduce imports more generally, as it works to escape an economic crisis.
“We need to diversify because every country has different requirements, he said. Pakistan has been struggling with a shortage of foreign reserves, which forced it to turn to the International Monetary Fund for support always. Pakistan logged a trade deficit of about $28 billion in the 12 months through June. Foreign direct investment in the country amounted to about $1.9 billion in the 12 months through June 2022, central bank figures show. Of that total, approximately 30% came from China, which has been pursuing Belt and Road Initiative infrastructure projects. Ahmad Jawad said Pakistan needs to cut its dependence on imports and for that Japanese companies could help provide technology. “I think it would be an ideal situation where Japanese companies would come and invest in Pakistan, in the technology side, so we are less reliant on imports,” he said.
PBF official also stated it should be ensured that there is no discrimination between domestic and foreign investors in terms of any tax or other concessions. In the medium to long run, we will also need to involve the general public through share offerings. However, this can only happen if the rate of domestic savings can be improved substantially and those funds can be channelled into investments. Only then will we be able to reduce the current account deficit effectively.

Source: nation.com.pk

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