AS democratic Pakistan led by industrialist Prime Minister Nawaz Sharif garners liberal support from global donors, experts at a think tank expect the economy to bounce to a high six per cent growth in 2014-15 while describing 2013-14 as the most difficult year in 67 years of the country’s economic history.

According to these economists, the sustainability of the high growth trend would, however, depend on the quality of policy and governance, which they consider not up to the mark currently, referring to the lack of adherence to Fiscal Responsibility Act.

They believe for want of sound economic advice, the Dar team may not serve the economy and the ruling party well. And they think that the country’s future is linked to the government’s ability to deal with the hydra headed monster of extremism and terrorism.

While acknowledging a growing role for the private sector and civil society in shaping the future, they hold the government primarily responsible for creating the economic eco system to realise the country’s development potential for the benefit of the majority.

On the question why a government that enjoys a heavy electoral mandate internally and considers external aid and loan inflows as endorsement of its policies by friendly countries and global donors feel the need to change course, there was no answer.

Shahid Javed Burki and Dr Pervez Hasan, the duo who produced the flagship annual report of the Institute of Public Policy titled ‘The state of economy: challenges and response, were candid but concerned about the direction the country is geared towards by the Nawaz government in their conversation with Dawn in Lahore last week. Burki’s outlook appeared more optimistic than that of Dr Hasan.

“The need of the moment is to make public policy choices that will address the identified challenges in order to improve people’s wellbeing. This can be done, and the effort will be appreciated by a citizenry that has been hit by a perfect storm of poor governance, energy shortages, loss of investor’s confidence and a very difficult external environment”, says the preface of the 7th Annual Report 2014.

The report is loaded with ideas, refreshingly frank commentary and identification of markers on path ahead. Beside useful focus on challenges and their solutions, its last chapter is dedicated to extremism.

One witnesses an enlightened approach on the subject that envelops many difficult aspects to define its direct and indirect link to losses and opportunity cost of sub optimal application of physical and human resources in the country. The correlation of security situation to income disparity and public discontent has also been explored.

“There are good reasons for policymakers to see extremism as a serious economic issue and to focus on ways to making the country more secure. Bringing sustained growth to the economy and distributing its rewards evenly among different segments of the population and different regions must rank high on policymakers’ ‘to do’ list”, says the report.

An interior ministry document is referred to project the loss to the economy caused by terrorism since 9/11 estimated at $7.8 billion or about 3.5pc of an estimated GDP of $225bn in 2012-13. According to the IPP report, “This figure does not include the amount the state spent on maintaining a large armed force (estimated at over 600,000 and translating into a ratio of three people in uniform for every 100,000 citizens — one of the highest ratios in the world)”.

“The wavering on the government’s part has worsened the situation and persuaded the extremists that the state does not have the stomach or the political will to take them on with full force. The impression that the Punjab-based ruling party is inclined to protect its province, even when many other parts of the country are under severe terrorist assault, could pose another existential threat, further weakening the state and compromising nationhood”, the report commented after giving data of number of attacks in different provinces over the past years.

The think tank warns in the end: “Unless it brings extremism under control, Pakistan will continue to be treated as an outlier in the international community. It will be shunned by foreign investors whose capital and technology it badly needs to modernise the economy and move forward. The absence of security has isolated the country. The fact that no Western airline flies to Pakistan is just one indication of this isolation”.