The people of Pakistan and the United Arab Emirates (UAE) are bound in historical ties of love, brotherhood and the hearts of the people of both countries beat together. Experts recorded that after China and the United States, the UAE is Pakistan’s third-largest trade partner. It is also viewed as an ideal export destination in the South Asian country, through policymakers because of its geographical proximity to Pakistan which reduces freight and transportation costs.
Statistics showed that the Gulf country is also home to an estimated 1.8 million Pakistani expatriates and after Saudi Arabia, the second-largest source of remittances for the South Asian nation of greater than 240 million.
Pakistan has secured a significant investment commitment of over $20 billion from the UAE in a bid to bolster its economy. The Government of Pakistan said the historic agreements between Pakistan and the UAE will strengthen the economy and take bilateral relations to new heights. The agreements between Pakistan and the UAE have ushered in the latest era of economic cooperation as the implementation of the agreements will have optimistic effects soon. The Government of Pakistan mentioned investment treaties will give a new dimension to mutual relations as the UAE will invest in port operations projects, energy, food security, wastewater treatment, banking and financial services among others.
The IMF expects Pakistan’s economy to perform better in the current and next fiscal years compared to other multilateral agencies’ projections despite the macroeconomic challenges faced by the cash-strapped country. The International Monetary Fund’s (IMF) World Economic Outlook for October, released, forecasts a growth of 2.5 per cent for the country’s economy in the current year, doubling to 5 per cent in the next fiscal year.
This is a significant jump compared to the 0.5 per cent contraction witnessed the previous fiscal year, signifying that the fund also expected quicker economic recovery than it had forecast earlier at a 5 per cent GDP growth rate in FY2027. The IMF’s latest growth forecast is lower than the government’s 3.5 per cent GDP growth target for the current year. The World Bank, which predicted Pakistan’s growth rate at 1.7 per cent for this fiscal year and 2.4 per cent in the next, claimed at a recent media event that its estimates were based on the August-September data. In doing so, the global lender kept the growth forecast unchanged from its July estimate when it inked a 9-month $3 billion new financing arrangement with Pakistan. However, it revised its estimates upwards for unemployment and inflation rates for current and subsequent fiscal years. The report added that once the economic review is completed, Pakistan will receive the next installment of $700 million from the IMF after its board’s approval. The IMF previously estimated inflation at 27 per cent for fiscal 2023 but revised it to 29.2 per cent. For this fiscal year, it revised the inflation projection to an average of 23.5 per cent from 22 per cent earlier, although it noted that year-end inflation could drop to as low as 17.5 per cent.
It is recorded that the current account deficit at 0.7 per cent of GDP during fiscal 2023, up from its previous estimate of 1.2 per cent. In contrast, the World Bank last week estimated inflation at 26.5 per cent for the current fiscal and 17 percent for 2025. Pakistan’s economy has been in a free fall mode for the last many years, bringing untold pressure on the poor masses in the form of unchecked inflation.
The UAE is on an economic tear, as higher oil prices, strong capital and investment inflows, and surging domestic activity boost the country’s growth outlook. Gross domestic product (GDP) is forecast to increase by 3.4 per cent in 2023 — a higher figure than any of its five peers in the Gulf Co-operation Council (GCC) — and increase to 4 percent in 2024. This follows a bumper 2022 in which the economy grew by 7.9 per cent thanks to spiking oil production and the effect of Covid-19 stimulus measures. The UAE’s prospects are also supported by its safe-harbour status; start-ups, entrepreneurs and investors are flocking to the country following Russia’s invasion of Ukraine and as political and economic stagnation has hit other regions. In June, surging immigration pushed Dubai’s population above 3.6 million for the first time, while the Dubai Chamber of Commerce says 30,000 new businesses were recorded in the first 6 months of the year, up from 21,000 in 2022. These trends have also lifted the country’s real estate market. Experts say structural reforms and other changes introduced through the government have assisted this new cohort of investors and entrepreneurs in boosting economic activity across the country.
Statistics showed that recent rule changes include a liberalised visa framework allowing 10-year residency permits, 100 percent foreign ownership of onshore companies in many sectors, and forward-looking digital regulations covering everything from e-commerce to cryptocurrencies. Dubai’s status as a booming digital business and financial hub aligns with the government’s ambitious Digital Economy Strategy, introduced in 2022, which aims to double the digital economy’s contribution to the UAE’s GDP from 9.7 per cent in 2022 to 19.4 per cent in the next 10 years. No doubt, the UAE has been at the forefront of digital transformation and investment for a long time. Sectors of digital excellence include smart government services, telecommunications and connectivity, cryptocurrencies and blockchain.