BUOYED by the impressive growth prospects for this year official circles are already talking about growth rates of eight percent and beyond in future years, raising the question whether such rates of growth are sustainable, given current investment rate of around 20 percent of GDP?
This discussion attempts an answer to this conundrum. Maintenance of souring growth rates requires a combination of high levels of national savings and investments and noteworthy growth in productivity.
Historically, Pakistan’s rate of domestic savings (comprising savings of households, retained earnings of the corporate sector and the government’s net savings, its revenues greater than its recurrent expenditures) has been perceptibly lower than level and rate of investment. The savings required to maintain high rates of investment.