Pakistan can’t be labelled a developing economy. Any so called developing nation needs to have sound macroeconomic factors, stable political system, and peace and tranquillity. Pakistan has none.
And now, two aspects – self-propelled terrorism and border clashes with India, Afghanistan and even Iran – both created by Pakistan itself have brought the country to a point of economic degradation. Let’s analyse the impact that both have had on the Pakistani economy.
The damage that terrorism has directly or indirectly caused Pakistan is a mindboggling $123.1 billion. Loss of lives and property, lost economic opportunities, and disintegration of the country’s standing in the world have been the major results of terrorism.
This number has been quoted in the Pakistan Economic Survey 2016/17 highlighting the effects of terrorism on the economy for the last 16 years.
Pakistan’s current GDP is around the $300 billion mark. This loss due to terrorism is equivalent to more than 40% of the country’s GDP.
It says, “The war on terror has been drastically affecting our economy, exports, physical infrastructure, tax collection and investment and our social fabric. Since the insurgency started in Pakistan following the US invasion of Afghanistan, more than 60,000 Pakistani civilians, security forces personnel and women and children have been killed in gun, bomb and suicide attacks.”
The $123.1 billion amounts to a loss of $7.7 billion per year which is more thanwhat Pakistan spends on education, health and other social safety schemes. It is also as much as Pakistan spent on its defence needs in the last year.
Pakistan has seen tumultuous times on its borders during the last year. Usually the minor skirmishes were restricted to its border with India, but now it is experiencing similar problems with Afghanistan and Iran as well.
Recently it had a clash with Afghan troops, and then Iran fired mortars at Pakistani army posts who were aiding infiltration of terrorists into Iran. Keeping in mind the growing problems its having with all three neighbours, Pakistan has now raised its defence budget further straining its feeble economy.
Despite Pakistan’s current account deficit tripling to $7.3 billion in the ten months through April, and its trade gap expanding to $3.2 billion in April, it has raised its defence budget by 7%.
Not only our border clashes a major concern and burden on the economy of the country, but another unexpected strain is that of providing Chinese workers in Pakistan with protection. Pakistan will add more troops to the already existing 9,000-strong special force raised to protect the Chinese workers further raising its expenditure.
We’ve often seen how Pakistan begs for financial aid from richer nations. Looking at how the current scenario is, it won’t be a surprise if it asks China to help with the deteriorating economy.