Manufacturing can help Pakistan’s new government realize economic potential, create jobs

The victory of Imran Khan as Pakistan’s new prime minister is drawing attention to how the new government will take corrective measures to stop the economy from deteriorating.

In his victory speech last week, Imran Khan said Pakistan is facing “the biggest ever economic challenge” in the country’s history, according to media reports. The country’s foreign reserves dropped below the $10 billion mark in June, an alarming level that is estimated to be insufficient to cover three months of trade deficits. The world is now keeping a close eye on whether Pakistan’s new government will be able to avoid a possible foreign currency crisis.

In Pakistan, a series of suicide attacks were carried out by terrorists ahead of the general elections on Wednesday. One of the most important tasks for the country now is to smoothly complete its political transition, maintain stability and forge a broad consensus among major political parties to promote community cohesiveness. Khan’s better-thanexpected performance in the general election and his strong relations with the military will be conducive for realizing a smooth government transition.

Political stability is a vital prerequisite to economic reform and development. Although some analysts have projected GDP growth for Pakistan at 5.6 percent in 2018, exports are a soft spot for the country’s economic growth. Economic reforms to explore the potential of its export sector should be a top priority for the new government, in a bid to relieve pressure on foreign reserves.

A remaining question is how to capitalize on business opportunities under the China-Pakistan Economic Corridor (CPEC) to make the country a new manufacturing base for the global economy. Pakistan has some crucial advantages for developing its manufacturing industries, like a demographic dividend and favorable geographic location. If the new government wants to create 10 million new jobs in five years to provide Pakistani youth with decent jobs, manufacturing is the best choice.

Pakistan’s economy clearly needs deep reform to realize its potential and promote sustainable growth. It will be a tough test for the new government to deal with economic challenges and find a benign development mode.