Thursday, December 21, 2006
Growth potential of emerging economies: Pakistan asked to put in place longterm initiatives
* Expert says Pakistan soon would be among next 11 emerging economies
By Sajid Chaudhry
ISLAMABAD: Pakistan has been asked to improve its policies to tackle the problem of law and order, put in place long-term initiatives to enhance political stability along with other economic measures to ensure its economic position in the world.
During a presentation here on Wednesday at the Prime MinisterĂ˘â‚¬â„˘s Secretariat, Goldman Sachs, the global strategic economic forecasting unit, said that in the global economy in 21st century Pakistan would be among next 11 (N-11) emerging economies, after Brazil, Russia India and China (Brics).
Speaking at a seminar on Ă˘â‚¬ËśEconomic growth potential of the emerging economies in the 21st century and PakistanĂ˘â‚¬â„˘s position in the emerging economiesĂ˘â‚¬â„˘, Prime Minister Shaukat Aziz said that the research done by the Goldman Sachs on Brics and Pakistan would help sustain the current trajectory of robust output growth in the context of N-11.
He lauded the Goldman Sachs staff for presenting paper on PakistanĂ˘â‚¬â„˘s long-term growth potential and said: Ă˘â‚¬Ĺ“I am very pleased to know that the Goldman Sachs research on PakistanĂ˘â‚¬â„˘s economy has led to a positive prognosis about its future and its inclusion in the group of new emerging economies.Ă˘â‚¬Âť
The economic success brings fresh challenges, he said, adding that although the countryĂ˘â‚¬â„˘s economy continued to maintain a solid pace of expansion, there were still major challenges ahead. He added that the economic landscape of Pakistan had changed. Ă˘â‚¬Ĺ“How to sustain the ongoing growth momentum in an environment of macroeconomic stability is the biggest challenge we face while going forward. Linked with this are the challenges of job creation, poverty alleviation, improving social indicators and most importantly, strengthening the countryĂ˘â‚¬â„˘s physical infrastructure to support 6 to 8 percent growth in the medium term,Ă˘â‚¬Âť he said.
Dr Salman Shah, the adviser to Prime Minister on Finance and Revenues, said that more recently the Goldman Sachs had released a paper on economic position of the Brics in the next 50 years. Ă˘â‚¬Ĺ“The paper has included Pakistan in the N-11,Ă˘â‚¬Âť he said. He said that Pakistan was fortunate in a sense that it had precious human capital for economic development. To utilise this human capital, the government is investing heavily in human resource development through education and technical education.
Mike Buchanan, the co-head of Goldman Sachs, said that Pakistan was among N-11 emerging economies after the Brics.
Elaborating his point of view on the economic potential of the emerging economies, he said that the largest economies in 2050 would also include Pakistan. Economies with the higher GDP would include China, USA, India, Japan, Brazil, Mexico, Russia, Germany, United Kingdom, France, Indonesia, Nigeria, Korea, Italy, Canada, Vietnam, Turkey, Philippines, Egypt, Pakistan, Iran and Bangladesh.
According to economic fundamentals of Pakistan, the Growth Environment Scores (GES) index of Pakistan during 2006 as compared to the GES in 2005 are sound and average growth rate for Pakistan is projected to be 6% to 8% per annum over the 2005-2050. PakistanĂ˘â‚¬â„˘s GDP to grow from $120 billion in the 2005 to $2.287 trillion by 2050. PakistanĂ˘â‚¬â„˘s per capita income to grow from $737 in 2005 to $7753 in 2050.
However, the Goldman Sachs research pointed out that PakistanĂ˘â‚¬â„˘s infrastructure except rail is not able to provide required backing to its economic development. According to it, $4.5 billion per annum investment in infrastructure is required to sustain the current projected GDP growth rate.
The Goldman Sachs has asked Pakistan to enhance the joint role of public and private sector in infrastructure development, allow incentives to encourage investment and increase gross savings, improve policies to tackle the problem of law and order situation, put in place long-term initiatives to enhance political stability and continued focus on education for its rapid economic development.