Foreign-exchange reserves fell, the rupee came under pressure, inflation accelerated, imports were

The fiscal position has improved, inflation is far more contained than during the recent crisis, foreign-exchange reserves have been rebuilt, and the IMF has acknowledged strong implementation of the current reform programme.

Millions of young people enter the labour force, while the state needs more revenue to finance education, healthcare, infrastructure and social protection. Growth of around 3-4% may keep the economy moving, but it is unlikely to transform living standards rapidly enough.

This results in a familiar sequence; faster growth, a wider external deficit, pressure on the rupee, declining reserves and eventually another stabilisation programme. This is the central economic paradox.

That is why Pakistan's long-term economic strategy must move from managing scarcity to building competitiveness. There is another remarkable feature of Pakistan's current economy: the growing importance of overseas Pakistanis.

Pakistan should therefore ask a difficult question; why should a talented young Pakistani need to leave the country to earn a globally competitive income? The answer points directly towards the next economic frontiers of information technology, professional services, engineering, digital commerce and other internationally tradable services.

The challenge is creating the infrastructure, education, regulation, financial systems and business environment that allow that talent to earn globally while remaining economically connected to Pakistan. Moving on, no discussion of growth problem can avoid energy.

That means confronting politically uncomfortable questions about tariffs, subsidies, distribution losses and state-owned entities. Economic transformation rarely comes from a single spectacular policy.