By Jawaid Bokhari
As of late, macroeconomic conditions have improved 鈥 with inflation falling and growth gradually recovering 鈥 but structural challenges such as low domestic savings persist, with a savings rate of just 7.4 per cent of GDP, compared to 27pc in South Asia and 41pc in East Asian economies.
State Bank of Pakistan (SBP) Governor Jameel Ahmad says due to a low savings rate, Pakistan heavily relies on foreign inflows to meet its development needs. 鈥淏ut this reliance has come at a cost,鈥 he added. 鈥淚t has contributed to repeated balance of payment crises, instability in the foreign exchange markets and inflationary pressures, which, over time, have weakened our growth momentum.鈥 In order to avoid the boom-bust cycle, Pakistan needs to mobilise more domestic savings and channel them into productive investments. The country鈥檚 low savings rate, coupled with declining investment, he notes, has constrained long-term growth prospects.
According to the Pakistan Bureau of Statistics, private investment has declined fro