Pakistan economy has a history of challenges, including high inflation, a large trade deficit, and a significant budget deficit. Additionally, the country has struggled with a lack of foreign investment and a limited manufacturing base. However, in recent years, the Pakistani government has implemented economic reforms and received financial assistance from international organizations, which has helped stabilize the economy. However, the COVID-19 pandemic has added to the economic challenges faced by the country, with businesses shutting down, jobs lost, and a decline in consumer spending.
Pakistan’s economy is currently facing one of its worst crises, as the country’s foreign exchange reserves have fallen to a critical level of USD 4.5 billion, as warned by The Federation of Pakistan Chambers of Commerce & Industry’s (FPCCI) Businessmen Panel (BMP).
Economic distress in Pakistan can be caused by a variety of factors. Some possible causes include:
Political instability: Political instability and uncertainty can create an environment that is not conducive to economic growth and can deter foreign investment.
Fiscal imbalances: High government spending and budget deficits can lead to inflation and a weaker currency, which can lead to economic distress.
External factors: External factors such as a decrease in foreign aid or remittances, a decline in commodity prices, or a global economic downturn can also contribute to economic distress in Pakistan.
Low foreign reserves: The country often struggle with low foreign reserves, making it difficult to finance imports and service debt.
Inadequate infrastructure: Inadequate infrastructure, such as poor transportation and energy systems, can also hamper economic growth.
High rate of poverty and unemployment: High rate of poverty and unemployment can also contribute to economic distress.
Corruption: Corruption at different level of government and business can also have a negative impact on the country’s economy.
