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On the one hand attack on Iraq was a human tragedy .It resulted in the loss of innocent lives and valuable properties. On the other hand it exerted a negative pressure on the world’s economy. Economic activities, the world over, were adversely affected. International trade to and from the war zone has almost suspended or substantially declined in volume. A significant part of global investment is likely to remain suspended as long as the uncertainty arising out of the war will not be over. It has definitely impeded tourism, private transfers and capital investment.
Here, as a Pakistani, I will examine the impact of US Iraq war on the economy of Pakistan. Pakistan is a country of uncertainties and misfortunes. It has got many natural resources but most of them are either underutilized or misused. Since its independence, Pakistan has been facing many domestic problems like political instability, unemployment, illiteracy, debt servicing, population, an expanding deficit in the balance of payments, corruption in various departments and a number of other social and economic problems. But for the last three years the situation has been changing positively and the growth rates have been going upwards. Pakistan's economy has recorded an impressive performance during July-January, 2002-03. Exports have reportedly gone up by 19 per cent to $6.14 billion during the period and it appeared that we were likely to achieve the export target of $10.4 billion fixed for fiscal 2002-03. Similarly, the imports were also reported to have moved up by 20 per cent to $6.85 billion, during the period. Industrial production had reportedly increased by about 8 per cent during the period according to latest estimates. The government had been able to contain inflation at 3.5 per cent during the period. But I am afraid that would this process be continued for the upcoming months.
Unfortunately the recent US Iraq war had put a negative impact on the economy. It is feared that economic activities in Pakistan could slow down resulting the achievement of annual targets fixed for tax collection, exports and industrial production could become doubtful. Return of Pakistani workers from the Gulf countries, in addition from the US, in large numbers could result in further deterioration of the unemployment, also decreasing the remittance income from the overseas workers. The inflation rate might also rise due to any extra-ordinary increase in crude oil prices. The increase in crude oil prices could put pressure on the prices of a number of other items. So it will harm the common man directly. The agriculture sector would also be adversely affected due to increase in the price of diesel because it will become much more expensive for the farmers to run the tubewells, for irrigation. Transporters would also increase the fares and again common people will be facing difficulties.
On the whole the impact of war on Pakistan’s economy could be adverse. In Pakistan, the government should plan for contingency plans. It should make a task force to monitor the impact of the Iraq situation and how it affects all aspect of activity. What is particularly important is to ensure that there is no shortage of essential items, especially oil. I hope Pakistan will over come the depressing situation and continue its journey towards the way to prosperity.
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hassan Ashraf Cheema
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