WB calls for continued reforms in Pakistan

14 Nov '15

4 min read

The services sector is the main contributor to growth in Pakistan as more than two-thirds of the economy's growth came from it, while industry and agriculture jointly contributed about one-third. In the agricultural sector, crop performance remained weak owing to prolonged adverse weather and two years of relatively low prices. In the industrial sector, the poor performance was primarily the result of weak growth in the large-scale manufacturing sector, which achieved growth of 2.4 per cent against a target of 7 per cent. Ongoing energy shortages, limited external demand and structural bottlenecks also constrained industrial growth. The weak growth in the industrial sector also acted as a drag on related services sectors such as trade and communications, which also posted relatively slow growth. On the positive side, transport, finance and insurance and government services all posted strong growth.

Waheed emphasized that given the shortage of domestic savings, there is an urgent need to attract foreign resources to meet Pakistan's investment needs. FDI has been declining over a number of years and remains extremely low, even at a time when many of Pakistan's peers are attracting large FDI inflows.

The report says that the government is implementing a number of reforms to improve the investment climate and diversify the investment portfolio. These include efforts to revive the privatization efforts, which will increase efficiency in management, improve services delivery and make space for private participation. Significant efforts are underway to improve the access to and quality of electricity, and simplifying and making the tax regime more transparent. It will be important to accelerate these and other reforms for growth to create jobs, provide better services to the public and ultimately reduce extreme poverty and boost shared prosperity in Pakistan. (SH)

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