ISLAMABAD: Pakistan’s lack of export competitiveness, chronic fiscal deficits, and low labour productivity are the root cause of the country’s sizeable macroeconomic challenges, the Asian Development Bank (ADB) said in a study released on Monday.

The country needs to take decisive reforms to unshackle the economy from its binding constraints, ADB’s country diagnostic ‘Pakistan: Reviving Growth through Competitiveness’, carried out in association of the Islamic Development Bank (IDB), suggested.

The ADB-IDB report notes that constraints were also imposed by weaknesses in the finance and power sectors, mobilisation of resources through foreign direct investment (FDI) and domestic savings, education and health systems, and the management of urbanisation process.

Policy makers and the government need to take a holistic approach to address the binding constraints preventing an improvement in labour productivity and competitiveness, the study said.

The Covid-19 pandemic underscores the urgent need to carry out reforms, the study said. “The pandemic is expected to further undermine the country’s already weak economic fundamentals, and the global economic fallout will affect the short- to medium-term outlook for certain sectors,” it added.

Published in Dawn, December 29th, 2020