Pakistan Economy: Caught in a Maelstrom

This paper investigates why Pakistan was not able to weather and quickly recover from the global financial crisis compared to other South Asian countries and the larger Asia-Pacific region. The paper argues that in fact Pakistan's macroeconomic difficulties preceded the crisis due to the spike in global food and fuel prices with its current account and fiscal deficits rising sharply - a situation further exacerbated due to the global economic slowdown. In spite of contractionary macroeconomic policies under an IMF programme it was not able to breakout of low economic growth and double digit inflation. A three pronged strategy is suggested to move the economy out of this maelstrom with a focus on prudent macroeconomic management, structural reforms and growth - enhancing public investments