Pakistan’s Economy: Sinking or swimming along the Indus?

Islamabad has received considerable economic assistance for its role in the 'anti-terror' frontline, but the debt trap is deep and production is in the doldrums. Temporary external gains can only buy time for structural change.

In the last five months, Pakistan's economy has been portrayed in the international media as a star performer among the world's emerging economies. Propped up by debt relief and enhanced foreign aid flows in return for its role as a frontline state in America's war in Afghanistan, Islamabad's financial performance has shot to the forefront of South Asia's economic achievements since 11 September. Moody's Investors Service has upgraded Pakistan's credit rating and foreign investors have come back to Pakistani shores. Beneath the surface, however, the country's endemic economic troubles continue to run deep. Agricultural output is faltering on account of a persistent water crisis, industrial growth remains negligible, and domestic investors keep away, wary of political uncertainties and inconsistency in government policy.

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Himal Southasian