Economic Outlook
1 Economic Outlook
1.1 Introduction
1. While economic activity remained subdued for yet another year in Pakistan, headline inflation fell to single-digits for the first time since FY07. Soft global commodity prices, downward revision in key energy prices (e.g., tariffs on household gas and CNG), and a relatively stable exchange rate, allowed the average inflation rate to fall to 7.4 percent in FY13 (from 11.0 percent in FY12), which was much lower than the 9.5 percent target for the year. The fall in inflation let the State Bank of Pakistan (SBP) cut its policy rate by 300 bps since August 2012 to 9.0 percent, which was last seen in FY07.
2. Robust growth in construction activity and capacity enhancement in a few sub-sectors, supported the industrial sector during FY13, but this growth was slightly below target (Table 1.1). Global prices helped contain Pakistan’s import bill, and there was some improvement in exports. Furthermore, higher than anticipated Coalition Support Fund (CSF) inflows, and modest growth in worker remittances, reduced the current account deficit to 1.0 percent of GDP in FY13, from 2.4 percent in the previous year.
3. Despite these favorable developments, growing security concerns and persistent structural weaknesses continue to hamper economic growth. While CSF is essentially a reimbursement for services provided to NATO countries in Afghanistan (by our armed forces), the actual economic cost of this war on Pakistan is significantly higher than CSF inflows. In addition to the loss of human lives, this war has further deteriorated law & order in the country, which in turn has adversely impacted the investment climate; caused production losses due to frequent interruption in economic activities; diverted resources to enhance security; encouraged manpower and some businesses to migrate out of the country; and adversely impacted revenue collection by the fiscal authorities.
4. At the same time, challenges in managing public sector enterprises; the need to expand the tax net to untaxed or under-taxed areas; to contain untargeted subsidies; to tackle theft and leakages in the energy sector; to revitalize the private sector; and to increase documentation, were largely unaddressed during FY13. As a result, the country’s fiscal performance did not improve during the year.
5. In a repeat from the previous year, the budget deficit exceeded the target for FY13 by a wide margin, as the realized deficit was 8.0 percent of GDP, against a target of 4.7 percent. The resulting pressure to secure financing, dominated policymaking throughout the year. As in previous years, poor tax collection and overruns in discretionary spending featured prominently. For the third consecutive year, the authorities had to bailout the energy sector by paying off the circular debt, which pushed the fiscal deficits way above the respective targets for these years (Figure 5.1 in Chapter 5).
6. With inadequate external funding, the onus of financing the fiscal deficit fell entirely on domestic sources – specifically the banking system. During the course of the year, the government borrowed Rs 939.6 billion from commercial banks, and an additional Rs 506.9 billion from SBP. In effect, Pakistan’s domestic debt increased by Rs 1.9 trillion, a 24.6 percent increase from the end of FY12.
7. The lack of external inflows also created challenges in financing the relatively small current account deficit. More specifically, the financial account (which is the primary source of funding the current account in Pakistan) recorded a net inflow of only US$ 0.3 billion during the year, compared to US$ 1.3 billion last year, and US$ 5.1 billion in FY10 – see Table 1.3. This, along with significant
State Bank of Pakistan Annual Report 2012-13
2
repayments to the IMF, pulled down SBP’s liquid FX reserves to a 55-month low of US$ 6.0 billion by end-June 2013. Not surprisingly, the Pak Rupee faced some pressure in June 2013.
1.2 Assessment of FY13
Real Sector
8. Real GDP growth was 3.6 percent, compared with 4.4 percent in FY12. This was disappointing, given the accommodating monetary policy and the expansionary impact of fiscal spending during the year. While all three sectors contributed to economic growth, the improvement in the industrial sector was more than offset by the slowdown in agriculture and services (Table 1.1). Agriculture, which accounts for more than one-fifth of GDP, posted below-target growth of 3.3 percent in FY13. The sharp recovery in minor crops and consistent growth in livestock was overshadowed by the marked slowdown in major crops (Chapter 2).
9. With the exception of sugarcane, all other major crops (wheat, rice and cotton) fell short of their annual targets – in fact, rice and cotton
posted a YoY decline. It is important to highlight that the agriculture sector in Pakistan is facing multiple challenges: (1) increasingly uncertain weather patterns (as evident from recurrent flooding) are damaging staple crops; (2) average yields are either stagnant or declining; (3) Pakistan has been identified as a water scarce country, yet little has been done to enhance storage and improve the effective distribution (and use) of canal water fed by the River Indus; (4) the increasing cost of inputs has reduced the farmer’s ability to use optimal levels of fertilizer; and (5) agricultural practices remain too traditional, as farmers have not adopted modern soil preparation and sowing techniques or mechanization.
10. Within the industrial sector, the most notable development was the pickup in manufacturing, which grew at 4.4 percent in FY13 – the highest rate in the past five years. The revival in manufacturing was broad-based as a large number of industries contributed to this recovery (Chapter 2). Capacity enhancement in iron & steel, rubber & plastic, and paper & paperboard was refreshing, while better margins due to lower prices of imported raw material (palm oil, rubber, coal, etc.) and the investment in alternate energy (especially by large-scale manufacturing), also contributed to this growth.
11. This sector also gained from the strong spillovers from a vibrant construction sector. In its role as the backstop to the economy, a portion of worker remittances continue to support construction activities, while the rest adds to disposable income.
12. The service sector did not perform too well, primarily because of the telecom sector. Strong competition amongst service providers, the increasing use of grey channels, and regulatory issues like the interruption of mobile services, the drive to regularize SIM cards, and additional taxes, reduced value addition by an otherwise vibrant telecom sector (Chapter 2). While finance & insurance posted higher growth compared to the previous year, this mainly reflects government borrowing from commercial banks. The momentum of this growth would be interrupted if government borrowing were to be contained during FY14. Table 1.1: Macroeconomic Indicators FY12 FY13 Target FY13 growth in percent Real GDP 4.4 4.3 3.6 Agriculture 3.5 4.0 3.3 Industry 2.7 3.8 3.5 Services 5.3 4.6 3.7 Consumption 6.0 - 4.6 Investment 1.7 - 1.3 CPI inflation 11.0 9.5 7.4 as percent of GDP Current account balance -2.1 -1.9 -1.0 Fiscal balance1 -8.5 -4.7 -8.0 Public debt 64.3 - 63.3 1: This includes one-off payments made in FY12 and FY13 to settle circular debt in the power sector. Source: State Bank of Pakistan and Pakistan Bureau of Statistics
Economic Outlook
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13. Despite the improvement in manufacturing, overall investment remained sluggish. The investment-to-GDP ratio was 14.2 percent in FY13, which is lower than the 14.9 percent realized in FY12. More importantly, private investment fell to 8.7 percent of GDP in FY13, which is far below the level required to meet the country’s needs. With a young population that is still growing at 2.0 percent per annum, job creation in the private sector must be prioritized to absorb the number of people who are entering the workplace every year. Given the need to generate private sector jobs to absorb this growth in the working population, sustained economic growth of 7 percent is required to improve social indicators and reduce poverty levels.1
14. The sharp reduction in the investment rate in recent years can be attributed to a familiar set of factors: energy shortages; heightened security concerns; weak contract enforcement; and persistent fiscal slippages. Not surprisingly, in a recent report about the Ease of Doing Business, Pakistan was ranked 107 among 185 countries, which is three notches below its ranking in 2012. In terms of ‘getting electricity’, Pakistan’s ranking slipped 5 notches to 171.

For further details; visit the link below
[http://www.sbp.org.pk/reports/annual...ex-eng-13.htm]

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GDP Growth 3.505 %

GDP Per Capita US$ 1,308.63

GDP (PPP), US Dollars US$ 542.216 Billion

GDP Per Capita (PPP), US Dollars US$ 2,969.68

GDP Share of World Total (PPP) 0.622 %

Investment (% of GDP) 12.945 %

Gross National Savings (% of GDP) 12.249 %

Inflation 8.163 %

Inflation (End of Year Change %) 9.018 %

Import Volume of All Items Including Goods and Services nge) 5.627 %

Export Volume of All Items Including Goods and Services (Percent Change) 7.534 %

Unemployment Rate (% of Labour Force) 9.235 %

Population 182.584 Million

General government total expenditure (% of GDP) 20.205 %

Total Government Net Debt (% of GDP) 60.786 %

Total Government Gross Debt (% of GDP) 64.136 %

Current Account Balance (% GDP) -0.696 %


+++++SOURCE+++++

http://www.economywatch.com/economic...ntry/Pakistan/

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Any suggestions to score maximum marks in verbal?

what is the rate of sales tax in pakistan?
16% or 17% ??

16%

source
www.tradingeconomics.com

.

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Wisdom comes through suffering...

Test: Was relatively difficult and it took up all the given time in answering or deriving the answers to the questions asked. Since the memory is fresh, I will post some of the questions which I can recall for prospective students in the later batches.

English:
First Paragraph was on Light Pollution (A trip to the mohave desert), which is a repeat from one of the previous examinations as I remember reading that Paragraph elsewhere.

Para II: Wright Brothers(Their experiments and design)

3rd Part: Make logical changes in the sentences/statements

4th Part: Connection between the First and Second Statements

Math:
Q: The sum of the mother's age and the son's age is 63. 4 years ago, mother's age was 4 times that of the son. Find the present age of the mother. (This question apparently had two correct answers)

Q: a:3 b:5, b:1/3:c:1/5. What is a:b:c?

Q: Underroot 625 * (5+5)^2

Q: Jumbled word and finding the "nth" alphabet

Q: Find the next in the sequence questions (I guess there were 3 of such type)

Q: x^2=4, what is the value of x^2? (Silly question)

Q: If the Length and breadth of a rectangle are increased by 40% and 20% respectively, by how much is its area increased?

Q: 40*.4*4 / 8.08?

General knowledge and IQ:

I found this to be the most difficult part since some of the question required exact figurative answers. An emphasis was on foreign exchange, economics and Pakistan's Geographical and population statistics.

I will add more as I recall them. Meanwhile, those who gave the test are more than welcome to contribute to the above.

Can you please write down all questions

Stupid test was taken by the stupid Nts.:
Totally unjustified test.
English portion has no antonym,synonyms,preposition, grammar,
No current affair. No economic indicator . The portion called as general knowledge was comprises of Economic current affair question.

The only purpose of this test was to just eliminate the maximum candidates from the game.

I am Fad uP with the so Called National Testing Organization.

Just Go to Hell!:

When the Result is Expected????????
and test is quite difficult specially GK