The Pakistani stock market has shown signs of an uplift during the last few quarters. The stock market ended 2019 on a good note as the KSE Index reported that it had delivered a 12.4% return in the past 12 months. The economy seems to be following the path that the policymakers have paved in recent years.
The recovery may seem slow to some, but the government policies are designed to make Pakistan stable long-term The recent announcements from the Pakistani government like huge tax exemptions to businesses within the Gwadar Free Zone has led to positive implications for the economy.
The labour market has seen substantial growth with significant developments that are taking place around the Gwadar Port. These activities coincide with the determination to develop CPEC and Pakistan together. The funds coming in from Chinese investment have resulted in providing a significant boost to employment and the economy of Pakistan.
Pakistan’s export industry is again on the rise and with the further development around the port this is expected only to increase. The country adopted a firm resolution to follow the Shenzhen model of growth for the development of the Gwadar Port, and this has helped Pakistan increase investment in the region.
The imports and exports industry now has the benefit of working on a port with proximity to the other nations in the area. Pakistan can have the upper hand in significant cross-boundary dealings, increasing the confidence of the investors and other trading nations. Moody’s recent upgrade of Pakistan’s outlook from negative to stable after the IMF program is significant evidence of the Pakistani economy stabilizing.
The role of the Gwadar city in this development will be phenomenal. As more and more people are expected to migrate to the new city from different parts, socio-economic development is also to take place, as well as infrastructure development.
The Pakistani government, with the Chinese government has already started taking steps such as the development of a Pak-China Technical and Vocational Training Institute in Gwadar at the cost of around $10 million, a desalination plant with the cost of Rs.95 billion, and the setting up of Pak-China Friendship Hospital at an estimated cost of $100 million. This will attract businesses and locals to move to the region for a new start.
The devaluation of the Pakistani currency observed in 2019 should help exports to become more competitive. This will further prove to be the catalyst in increasing trade happening in the country. The availability of the Gwadar Port will make the deals more feasible.
The uptick in economic growth was explained by the country’s minister for financial affairs, Muhammad Hammad Azhar, in a recent interview.
Azhar stated that the CPEC had entered a new phase, focusing not only on energy and infrastructure but also on industrialization and socio-economic development, as well as modernization of agriculture and tourism.
The minister stated that “tax revenues in July-November 2019 rose 17% from last year, driving down the current-account deficit by 73% in the same period.”
Finally, with the development of the Gwadar city and other projects in the Gwadar Free Zone, the problem of unemployment is becoming a priority. More than a million people are predicted to be employed in Gwadar. Ultimately this will give Pakistan a position to stronger negotiate and work with an upper hand in the region.