Pakistan’s economy has been facing several challenges in recent years, including a large fiscal deficit, high inflation, and a growing balance of payments crisis. However, the government has been implementing various economic reforms and seeking assistance from international organizations such as the International Monetary Fund (IMF) to stabilize the economy. The country’s GDP growth has been positive but the unemployment rate is high. The country is also facing a high external debt and a low foreign exchange reserve. The COVID-19 pandemic has further exacerbated these economic challenges.
Pakistan’s Economic Indicators
Some key economic indicators for Pakistan include:
GDP: According to the World Bank, Pakistan’s GDP was $314.9 billion in 2020. The GDP per capita was $1,397. GDP growth rate has fallen from 6% in 2022 to a forecast of 3.5% in 20-23.
Inflation: Inflation in Pakistan has been high in recent years, reaching 12.1% in 2022 and expected to be 20% in 2023.
Unemployment: The unemployment rate in Pakistan was 6.1% in 2020, according to the Pakistan Bureau of Statistics.
Balance of Payments: Pakistan has been facing a balance of payments crisis in recent years, with a large current account deficit of 4.7% at the end of 2022.
External Debt: External debt of Pakistan was 32.5% of GDP at the end of 2022.
Foreign Exchange Reserve: The foreign exchange reserve of Pakistan has been low and reached $1.5 bn at the end of 2022.
Budget Deficit was 7% of GDP in 2022.
Political Instability
Political instability in Pakistan has been a persistent problem throughout the country’s history. This instability can manifest in several ways, including:
Political crises: Pakistan has had a history of military coups and political crises, with several periods of military rule. The country has also seen a number of governments being dismissed or dissolved by the president or the courts.
Institutional conflicts: There have been conflicts between different branches and levels of government in Pakistan, such as between the executive and the judiciary, and between the federal government and the provinces.
Ethnic and sectarian tensions: Pakistan is a diverse country with several ethnic and sectarian groups, and tensions between these groups have led to violence and instability in some regions.
Terrorism: Pakistan has been affected by terrorism for many years, with attacks on civilians and security forces by various extremist groups.
Protests and civil unrest: There have been several episodes of civil unrest and protests in Pakistan, often sparked by political or economic grievances.
These issues have led to a lack of continuity in the implementation of policies and reforms, which has affected the country’s economic and social development.
Pakistan Army and the Political Leadership
Tensions and discord between the Pakistan Army and political leadership is an open secret. The Pakistan Army is a powerful institution in the country and has historically played a significant role in politics. While the government and the military have traditionally had a symbiotic relationship, there have been instances of tension between the two in the past.
One of the major causes of discord has been the handling of national security and foreign policy. The government’s decision to seek aid from international financial institutions has also been a source of tension. The military also has been critical of the government’s efforts to improve relations with India and to bring peace in Afghanistan.
There have also been reports of the military’s dissatisfaction with the government’s handling of the economy, as well as its efforts to combat corruption.
Taliban Against Pakistan
The Taliban, which is an Islamist extremist group that emerged in Afghanistan in the 1990s, has had a complex relationship with Pakistan over the years. Pakistan has been accused of supporting the Taliban in the past, as it saw the group as a means of maintaining influence in Afghanistan and counterbalancing Indian influence.
However, since taking over power in 2022, the Taliban has turned against Pakistan and has carried out a number of attacks on Pakistani military and civilian targets through its proxies . This change in stance is likely due to Taliban’s growing strength and confidence in Afghanistan and disagreements over territory.
Taliban’s Rejection of the Durand Line
The Durand Line is a 2,430-kilometer (1,510-mile) border that was established in 1896 between British India and Afghanistan, it is now the border between Afghanistan and Pakistan. The Afghan Taliban, like many Afghans, does not recognize the Durand Line as the official border between Afghanistan and Pakistan, and views it as an arbitrary and imposed boundary that has divided the Pashtun ethnic group and their traditional homeland.
Corruption in Pakistan
Corruption is a major problem in Pakistan, and has been a persistent issue throughout the country’s history. Corruption can be found in various sectors, including politics, business, and the judiciary. The issue affects the society and the economy, it can lead to a lack of trust in government institutions, undermines the rule of law, and discourage foreign investment and economic growth.
According to Transparency International’s Corruption Perception Index, Pakistan ranks 116 out of 180 countries in terms of corruption.
The government has taken steps to combat corruption, such as creating the National Accountability Bureau (NAB) to investigate and prosecute corrupt officials. However, the effectiveness of these efforts has been limited and corruption remains a major challenge. One of the main reasons for the failure to combat corruption is the lack of political will and the power of corrupt interest groups.
There are several factors that contribute to the high level of corruption in Pakistan, including lack of transparency and accountability, weak rule of law, political influence, socio-economic factors:
Major Terrorist Groups in Pakistan
There are several terrorist groups that have been active in Pakistan over the years, some of the major ones include:
Tehrik-i-Taliban Pakistan (TTP): Also known as the Pakistani Taliban, the TTP is a federation of various Islamist extremist groups that have been active in Pakistan since 2007. The group has carried out a number of attacks on Pakistani military and civilian targets, and has also been involved in cross-border attacks on coalition forces in Afghanistan.
Lashkar-e-Taiba (LeT): This is a Pakistan-based Islamist extremist group that has been active since the 1980s. The group has been designated as a terrorist organization by the United Nations and several countries, including the United States and India. LeT has been responsible for a number of high-profile attacks, including the 2008 Mumbai attacks that killed more than 160 people.
Jaish-e-Mohammed (JeM): This is another Pakistan-based Islamist extremist group that has been active since the 1990s. The group has been responsible for a number of terrorist attacks in India, including the 2001 attack on the Indian parliament.
Sipah-e-Sahaba Pakistan (SSP): This is a Sunni extremist group that has been active in Pakistan since the 1980s. The group has been responsible for a number of attacks on minority Shia Muslims in Pakistan.
Balochistan Liberation Army (BLA): This is a militant separatist group that has been active in Balochistan province of Pakistan since 2000s. The group has been responsible for several terrorist attacks on security forces, government officials, and infrastructure projects.
Balochi Attacks on Chinese Nationals
Balochistan is rich in natural resources, but it has a long-standing insurgency, with separatist groups demanding greater autonomy and control over the region’s resources. There have been several instances of attacks on Chinese nationals in Balochistan. These groups have targeted Chinese workers and assets in their attacks, due to their perception that the Chinese are exploiting Balochistan’s resources and displacing local communities.
These attacks have raised concerns about the security of Chinese workers and assets in Pakistan, and the Chinese government has called on the Pakistani government to take more action to protect Chinese citizens in the country.
China’s concerns over Security Situation
China has invested heavily in Pakistan through its Belt and Road Initiative (BRI), a massive infrastructure development project aimed at connecting Asia, Europe and Africa. A significant portion of this investment is focused on Pakistan, and includes the construction of highways, power plants, and ports. However, China has expressed concerns over the security of its workers and assets in Pakistan due to the ongoing security challenges in the country, including terrorism, extremism, and separatist movements.
Frustration in Pakistan Occupied Kashmir
Pakistan-Occupied Kashmir (POK) and Gilgit-Baltistan, have seen protests and discord over the years for a number of reasons, including political rights, economic rights, human rights, lack of representation, political and administrative corruption and disagreements over the status of Gilgit-Baltistan
Foreign Relations
India and Pakistan, the two nuclear-armed giants of South Asia, each mark the 75th anniversary of their independence this week. Disputes over their shared border and the territory of Kashmir have been a recurrent source of conflict between the two countries over the course of their histories, and new geopolitical alignments, changes in conventional and nuclear military capabilities, and deep mistrust continue to forestall any normalization of ties. China’s rise and the attendant great power competition have complicated both Islamabad’s and New Delhi’s strategic calculus as they both look to balance relations with Washington and Beijing.
India’s relationship with Pakistan will continue to remain fraught and weighted down by cross-border “gray zone” confrontation and militancy targeted against us.
Pakistan’s greatest security challenges will continue to emanate from its neighborhood — from the unsettled situation on its border with an unstable Afghanistan and from troubled relations with India. An imposing foreign policy challenge will be to navigate the growing confrontation between the United States and China, two global powers with which Pakistan has its most important bilateral relationships.
Ties with China will remain an overriding priority for Islamabad.
Pakistan seeks a reset of ties with the United States, but relations will inevitably be affected by Washington’s standoff with Beijing.
