The global economy is passing through a precarious phase, as we are facing genuine fears of an economic slowdown, and multiple conflicts that could brew into a full out war, engulfing many countries.
Amidst all this, Pakistan is faced with a set of unique challenges, spanning the country’s economy and politics. The dilemma with developing and highly import dependent countries like Pakistan is that we are heavily exposed to international events that can disrupt global supply chains, and create price shocks in global commodities like food and energy.
The economy of any country relies heavily on its national sentiment. Any government that is able to create a positive vibe about the future outlook for economic growth, can attract both local and foreign direct investment (FDI).
The Current Economic State of Pakistan
If we sum-up the current economic state of Pakistan in one word, that would be “uncertainty”. This is even more damaging than an economy’s negative outlook, as even in negativity, investors can devise a clear gameplan for mitigating their risks, while still generating socio-economic activity.
The problem with uncertainty is that it simply urges investors to shy away. Despite having capital to invest in a promising business opportunity, an investor would prefer staying on the sidelines. An old saying goes, “Capital is very shy”, and uncertainty further adds to an investor’s cautious approach.
The Government’s Incapacity to Generate Economic Activity
According to one school of thought, it is the government that should take the lead in creating economic activity, by injecting its own capital. Our view is that the primary role of any government should be to focus on providing the enabling environment for investment, and rest will take care of itself.
Even if we assume that the government should intervene, it is so hard pressed at the moment, due to both domestic and foreign borrowing, that it is in no position to inject its capital and generate economic activity of any sort.
The Impact of General Elections on the Economy
In a time of such high uncertainty and stagnation, general elections can prove a “breadth of fresh air” for the economy. This whole activity generates a sense of certainty and direction, at least for the upcoming five years. This in turn enables investors to explore investment opportunities, particularly in incentivized sectors.
However, one thing which still needs clarity is whether any single political party among the front-runners would be able to clinch simple majority to implement its socio-economic agenda.
If the outcome of the upcoming elections in February of 2024 is a “hung parliament”, it would be nearly impossible to introduce and implement any tangible economic reforms agenda in the country.
Typically, coalition governments are incapacitated to introduce any tangible economic reforms agenda, as each constituent political part that forms the coalition government is tied to the commitments it made to its electorate.
The Best Case Scenario for Pakistan
Without speculating on which party would do well in the upcoming general elections, the best case scenario for Pakistan would be that any single major political party clinches simple majority, enabling it to initiate at least administrative level reforms in the country’s economy.
In the case of large coalition governments, legislation becomes a lot more complicated and time-taking. In a bid to “accommodate the reservations” of each individual coalition partner, the piece of legislation wholly or partially loses its purpose, not to mention the delays associated with reaching consensus.
As a Pakistani, What Can We Do?
In this larger picture, is there anything we can do as a Pakistani citizen? Well, the most important thing for us to do is cast our vote, regardless of our personal, political or religious inclination.
This is not only a national duty, but will also bring us one step closer to giving a clear mandate to at least one single political party, enabling it to make a real difference.
Most importantly, this will set aside the shadows of uncertainty, and further economic hardship, as the country will be able to take a clear course going forward.
Let us all hope that we cross this milestone of General Elections in a peaceful and non-disruptive manner. And that the masses actively participate in the electoral process by casting their vote, and a political party with clear simple majority emerges.
If all goes well, Pakistan will again be able to position itself as a noteworthy emerging economy of the region, attracting both local and foreign investment.
The country’s real estate sector has also been suffering stagnation for the past many months. However, this is a good time to invest in promising real estate projects, and as soon as uncertainty subsides, we should see a lot of positive activity in real-estate as well.
Contact Brick Marketing and Developers (Pvt.) Ltd. for professional real estate sector advice. One of our experts will suggest an investment opportunity that is tailored to your investment goals and timeframe.