Economic Problems

In Pakistan
Maida Nadeem – Fizza Zaheer
Malaika Fazal – Moiz Wali
M.Yahya
 Contents

C
Introduction and Overview

Poverty and Inequality

Unemployment and
Underemployment

Inflation and Economic Instability

Solutions and Recommendations

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 Introduction
In this presentation we will explore the economic problems faced by
Pakistan, particularly poverty, inequality, unemployment, and inflation,
through the lenses of ethical and Islamic principles. Understanding these
issues from multiple perspectives helps identify comprehensive solutions.

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 Economic Overview of Pakistan
Pakistan, a South Asian country with a population of over 230 million,
has a mixed economy with agriculture, industry, and services sectors
contributing to its GDP. Despite its potential, Pakistan faces numerous
economic challenges, including political instability, high public debt, and
structural weaknesses in key sectors.

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 Current Economic Indicators
GDP Growth Rate
Around 0.3% (2023 estimate).
Fluctuating due to political and economic instability. Moderate
growth in recent years, with a focus on post-COVID-19 recovery.

Inflation Rate
Approximately 29.18% (2023 estimate).
Recent spikes due to global economic conditions, supply chain
disruptions, and domestic policy issues.

Unemployment Rate
Around 8.5% (2023 estimate).
A significant issue, with many workers employed in low-
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productivity jobs or working fewer hours than desired.
Poverty And Inequality
 What is poverty and inequality?
Poverty
The state where individuals lack sufficient income
or resources to meet basic needs such as food,
shelter, and healthcare.

Inequality
The unequal distribution of wealth, income,
opportunities, and access to resources within a
society.

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 Current State of Poverty in Pakistan
As of 2023, poverty is expected to reach 37.2 percent. The
rate is slightly below the last observed measure in 2018,
which stood at 39.8 percent; however, when accounting for
population growth, there are almost 3 million more poor
people in the country than in 2018.

While inequality, measured by the Gini index has remained

relatively stable at around 29.6, the last decade's economic
growth has not helped to close deep spatial disparities. For
example, 36 percent of school-age girls are not attending
school, which is 11 percentage points higher than for boys, a
situation with long-term ramifications for inequality and
access to opportunities.

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 Causes of Poverty and Inequality
1. Economic Factors:
o High levels of unemployment and underemployment
contribute to low household incomes.
o Frequent economic crises and inflation erode
purchasing power.
2. Social Factors:
o Lack of access to quality education limits economic
opportunities.
o Poor healthcare infrastructure leads to high medical
expenses and reduced productivity.
3. Political Factors:
o Corruption and inefficient government policies
hinder effective poverty alleviation effort.

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 Impacts of Poverty and Inequality
1. Health Impacts:
• High rates of malnutrition among children and adults.
• Limited access to healthcare services leads to higher
morbidity and mortality rates.
2. Educational Impacts:
• Lower school enrollment and high dropout rates,
particularly among girls and in rural areas.
• Poor quality of education due to lack of resources and
trained teachers.
3. Social and Economic Impacts:
• Higher crime rates and social unrest as a result of
economic disparity and frustration.
• Stunted economic growth due to underutilization of
human capital and reduced consumer spending.

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 Reduction of Poverty and inequality in the
perspective of Islam

Zakat
An obligatory form of almsgiving in Islam, which aims to
redistribute wealth and alleviate poverty. So that the wealth will
not remains within the hands of rich rather it will be distributed
among the poor ones.

Sadqah (Voluntary Charity)

Islam promotes equitable distribution and condemns hoarding of
wealth. Otherwise the rich will become more richer and the poor
one becomes more poor.

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Unemployment and Underemployment
 Unemployment
Unemployment refers to the situation where people willing to
work at prevailing wages cannot find jobs.

Youth unemployment is particularly high, causing social and

economic issues.

Causes
Rapid population growth outpaces job creation.
Industrial sector growth is slow, limiting job opportunities.
Mismatch between the education system and market needs,
leading to a skills gap. 13
 Underemployment

Underemployment includes workers employed below

their skill level or in part-time jobs when full-time is
desired.

Impact:
Underemployment leads to low income and job
dissatisfaction, affecting overall economic
productivity.
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 Islamic and Ethical Perspective
In Islam, work is considered a form of worship The Ethical perspective involves ensuring
('ibadah) and is essential for maintaining personal human dignity, social justice, and economic
dignity and contributing to the welfare of society. equity.
Unemployment, particularly when it results from
Employment is a fundamental human right
unwillingness to work despite the ability, is
essential for personal dignity and social
discouraged.
inclusion, and its absence can lead to poverty
and psychological distress.
Allah encourages seeking lawful sustenance and
Societies and governments have an ethical
striving for a halal livelihood. In Surah Al-Jumu'ah
duty to create fair opportunities for all.
(62:10), Allah says:
Businesses should embrace corporate social
responsibility by fostering job creation and
"And when the prayer has been concluded, disperse
fair wages.
within the land and seek from the bounty of Allah,
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and remember Allah often that you may succeed."
Inflation and Economic Instability
 Overview
Inflation is the rate at which the general level of prices for goods and
services rises, leading to a decrease in purchasing power. Economic
instability refers to unpredictable fluctuations in the economy that can
affect growth and stability.

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 Inflation
• Pakistan has been grappling with persistent
inflation, significantly affecting its socio-economic
landscape.
• It has eroded the purchasing power of consumers,
particularly impacting low and middle-income
households.
• The primary drivers of inflation in Pakistan include
fluctuating oil prices, a depreciating currency, and
supply chain disruptions.
• Additionally, the reliance on imported goods makes
the economy vulnerable to global market volatility.
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 Economic Instability
• Economic instability in Pakistan is exacerbated
by political uncertainty, fiscal deficits, and a
heavy debt burden.
• Frequent changes in government policies and
political unrest undermine investor confidence,
leading to reduced foreign direct investment.
• The fiscal deficit, driven by excessive
government spending and inadequate revenue
generation, compels the government to borrow,
increasing the national debt and creating a vicious
cycle of debt servicing and further borrowing.
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 Islamic and Ethical Perspective
Islam promotes economic justice and the equitable
distribution of wealth to prevent disparities that lead to
instability. Surah Al-Hashr (59:7) states:
"[And] so that it will not be a perpetual distribution among
the rich from among you."
This verse encourages policies that ensure wealth circulates
fairly within society, mitigating economic instability caused
by extreme inequality.
The Prophet Muhammad (peace be upon him) advocated for
fair pricing and warned against hoarding and price
manipulation. He said:
"Whoever hoards food (and keeps it from the needy), Allah
will inflict him with a portion of Jahannam."(Musnad
Ahmad, 15774)
This hadith underscores the ethical responsibility to avoid
practices that can lead to artificial inflation and economic
Inflation and economic instability undermine
social justice, equity, and the well-being of
individuals and communities.
Ethical economic principles demand fair
distribution of resources, transparency, and
responsible governance to prevent exploitation
and ensure stability.
Persistent inflation erodes purchasing power,
disproportionately affecting the poor and
exacerbating inequalities.
Addressing these issues ethically involves
implementing policies that promote economic
fairness, protect vulnerable populations, and
foster sustainable development. 20
Solutions and Recommendations
 Addressing Poverty and Inequality
 To reduce poverty, Pakistan needs to improve education, healthcare, and
social services.
 Promoting wealth distribution through Islamic practices like Zakat and
Waqf can also help alleviate poverty and inequality.

Combating Unemployment
 Strategies for job creation include encouraging industrial growth,
implementing skill development programs, and fostering entrepreneurship.
 Government and private sector collaboration is crucial for creating
sustainable employment opportunities.
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 Controlling Inflation
 Controlling inflation requires effective monetary policies, stabilizing
supply and demand, and reducing dependency on imports.
 Promoting ethical business practices and fair trade can also help manage
inflation.

Ensuring Economic Stability

 Achieving economic stability involves sustainable economic policies,
transparency in governance, and fostering international trade relations.
 Ethical considerations should guide policy-making and implementation to
ensure long-term stability.

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Thank you