Uzair bin Farid

The vitality of the construction sector is crucial for Pakistan’s sustained economic growth. A critical study of Pakistan’s economic history shows that the country has always relied on developments in the construction sector to achieve high rates of economic growth. According to WealthPK research, in the decade of 1960s, Pakistan registered high rates of economic growth because of the development work on the various dams across the country. Large dams including Tarbela dam and the Mangla dam were constructed during that period.

Moving forward by a couple of decades, in the late 1990s, there was again a surge in economic growth rates because of the development work undertaken by the then government. Across the country, a network of roads and motorways was laid to improve connectivity among different parts of the country that were previously not trading with each other to their true potential.

There was again an increase in economic growth rates during the first two decades of the 21st century because of the massive investments coming into the country under the umbrella of China-Pakistan Economic Corridor (CPEC). The fact that the construction sector is the mainstay of Pakistan’s economic growth was most evident in the two years in which the Covid-19 pandemic was at its highest.

During the ‘great lockdowns’ of the Covid-19 pandemic, the then government gave a lot of incentives to the construction sector in the form of tax rebates and special packages. Those measures helped keep the industry operating since many industries are linked to the construction sector. They include the industries of ceramics, tiles, wood, paint, and real estate, among others. These industries, in turn, are linked to more industries down the line as they depend on other industries for their raw material and manufacturing equipment.

It is because of the same reason that in 2020-21 the growth rate of Pakistan’s economy was registered at 5.7% soon after the very low growth rate of -0.9% in the first Covid-19 year of 2019-20. The construction sector visibly developed in that year with many new commercial buildings being erected in a matter of few months. In the capital city of Islamabad alone, along the main Jinnah Avenue, quite a few sky-scrapers were erected as soon as the government allowed their construction coupled with economic and business incentives for the investors.

The construction sector is a major contributor to the growth rates of economies around the world. China invested heavily in its construction sector during the decades of its double-digit growth. The recent downward slashing of the projected economic growth of Pakistan by the International Monetary Fund (IMF) to 0.5% is a reminder to the policy-makers that they need to make policies prioritising investment in those sectors which will return growth to the economy and help the country meet its key challenges. The construction sector is one of those sectors, as it gives boost to the industry and create employment for millions of daily wagers across the country with visible contribution to the annual economic growth rate.

Credit: Independent News Pakistan-WealthPk