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Old Monday, November 26, 2012
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Default Pakistan Economy -an overview

Pakistan Economy - overview

Decades of internal political disputes and low levels of foreign investment have led to slow growth and underdevelopment in Pakistan. Agriculture accounts for more than one-fifth of output and two-fifths of employment. Textiles account for most of Pakistan's export earnings, and Pakistan's failure to expand a viable export base for other manufactures has left the country vulnerable to shifts in world demand. Official unemployment is 6%, but this fails to capture the true picture, because much of the economy is informal and underemployment remains high. Over the past few years, low growth and high inflation, led by a spurt in food prices, have increased the amount of poverty - the UN Human Development Report estimated poverty in 2011 at almost 50% of the population. Inflation has worsened the situation, climbing from 7.7% in 2007 to more than 13% for 2011, before declining to 9.3% at year-end. As a result of political and economic instability, the Pakistani rupee has depreciated more than 40% since 2007. The government agreed to an International Monetary Fund Standby Arrangement in November 2008 in response to a balance of payments crisis. Although the economy has stabilized since the crisis, it has failed to recover. Foreign investment has not returned, due to investor concerns related to governance, energy, security, and a slow-down in the global economy. Remittances from overseas workers, averaging about $1 billion a month since March 2011, remain a bright spot for Pakistan. However, after a small current account surplus in fiscal year 2011 (July 2010/June 2011), Pakistan's current account turned to deficit in the second half of 2011, spurred by higher prices for imported oil and lower prices for exported cotton. Pakistan remains stuck in a low-income, low-growth trap, with growth averaging 2.9% per year from 2008 to 2011. Pakistan must address long standing issues related to government revenues and energy production in order to spur the amount of economic growth that will be necessary to employ its growing population. Other long term challenges include expanding investment in education and healthcare, and reducing dependence on foreign donors.
GDP (purchasing power parity)
$488 billion (2011 est.)
$476.5 billion (2010 est.)
$459.3 billion (2009 est.)
note: data are in 2011 US dollars
GDP (official exchange rate)
$204.1 billion (2011 est.)
GDP - real growth rate
2.4% (2011 est.)
3.8% (2010 est.)
1.7% (2009 est.)
GDP - per capita (PPP)
$2,800 (2011 est.)
$2,800 (2010 est.)
$2,700 (2009 est.)
note: data are in 2011 US dollars
GDP - composition by sector
agriculture: 20.9%
industry: 25.8%
services: 53.3% (2011 est.)
Population below poverty line
22.3% (FY05/06 est.)
Labor force
58.41 million
note: extensive export of labor, mostly to the Middle East, and use of child labor (2011 est.)
Labor force - by occupation
agriculture: 45%
industry: 20.1%
services: 34.9% (2010 est.)
Unemployment rate
5.6% (2011 est.)
5.5% (2010 est.)
note: substantial underemployment exists
Unemployment, youth ages 15-24
total: 7.7%
male: 7%
female: 10.5% (2008)
Household income or consumption by percentage share
lowest 10%: 9.9%
highest 10%: 39.3% (FY07/08)
Distribution of family income - Gini index
30.6 (FY07/08)
41 (FY98/99)
Investment (gross fixed)
11.8% of GDP (2011 est.)
Budget
revenues: $26.3 billion
expenditures: $39.77 billion (2011 est.)
Taxes and other revenues
12.9% of GDP (2011 est.)
Budget surplus (+) or deficit (-)
-6.6% of GDP (2011 est.)
Public debt
60.1% of GDP (2011 est.)
61.4% of GDP (2010 est.)
Inflation rate (consumer prices)
13.7% (2011 est.)
13.9% (2010 est.)
Central bank discount rate
12% (31 January 2012 est.)
14% (31 December 2010 est.)
Commercial bank prime lending rate
12.34% (31 December 2011 est.)
14.12% (31 December 2010 est.)
Stock of money
$NA (31 December 2008)
$52.76 billion (31 December 2007)
Stock of narrow money
$72.32 billion (30 June 2011)
$62.02 billion (30 June 2010)
Stock of quasi money
$NA (31 December 2008)
$18.42 billion (31 December 2007)
Stock of broad money
$79.67 billion (31 December 2011 est.)
$85.22 billion (31 December 2010 est.)
Stock of domestic credit
$65.72 billion (31 December 2011 est.)
$61.39 billion (31 December 2010 est.)
Market value of publicly traded shares
$38.17 billion (31 December 2010)
$33.24 billion (31 December 2009)
$23.49 billion (31 December 2008)
Agriculture - products
cotton, wheat, rice, sugarcane, fruits, vegetables; milk, beef, mutton, eggs
Industries
textiles and apparel, food processing, pharmaceuticals, construction materials, paper products, fertilizer, shrimp
Industrial production growth rate
3% (2011 est.)
Electricity - production
93.35 billion kWh (2010 est.)
Electricity - production by source
fossil fuel: 68.8%
hydro: 28.2%
nuclear: 3%
other: 0% (2001)
Electricity - consumption
74.35 billion kWh (2010 est.)
Electricity - exports
0 kWh (2011 est.)
Electricity - imports
0 kWh (2009 est.)
Oil - production
64,950 bbl/day (2010 est.)
Oil - consumption
410,000 bbl/day (2010 est.)
Oil - exports
29,840 bbl/day (2009 est.)
Oil - imports
346,400 bbl/day (2009 est.)
Oil - proved reserves
313 million bbl (1 January 2011 est.)
Natural gas - production
42.9 billion cu m (2011 est.)
Natural gas - consumption
42.9 billion cu m (2011 est.)
Natural gas - exports
0 cu m (2009 est.)
Natural gas - imports
0 cu m (2009 est.)
Natural gas - proved reserves
840.2 billion cu m (1 January 2011 est.)
Current Account Balance
$268 million (2011 est.)
-$3.94 billion (2010 est.)
Exports
$25.35 billion (2011 est.)
$19.67 billion (2010 est.)
Exports - commodities
textiles (garments, bed linen, cotton cloth, yarn), rice, leather goods, sports goods, chemicals, manufactures, carpets and rugs
Exports - partners
US 15.8%, Afghanistan 8.1%, UAE 7.9%, China 7.3%, UK 4.3%, Germany 4.2% (2009)
Imports
$35.82 billion (2011 est.)
$31.2 billion (2010 est.)
Imports - commodities
petroleum, petroleum products, machinery, plastics, transportation equipment, edible oils, paper and paperboard, iron and steel, tea
Imports - partners
UAE 16.3%, Saudi Arabia 12.5%, China 11.6%, Kuwait 8.4%, Singapore 7.1%, Malaysia 5% (2009)
Reserves of foreign exchange and gold
$17.02 billion (31 December 2011 est.)
$17.21 billion (31 December 2010 est.)
Debt - external
$61.83 billion (31 December 2011 est.)
$59.91 billion (31 December 2010 est.)
Stock of direct foreign investment - at home
$31.26 billion (31 December 2011 est.)
$30.06 billion (31 December 2010 est.)
Stock of direct foreign investment - abroad
$1.419 billion (31 December 2011 est.)
$1.362 billion (31 December 2010 est.)
Exchange rates
Pakistani rupees (PKR) per US dollar -
85.99 (2011 est.)
85.19 (2010 est.)
81.71 (2009)
70.64 (2008)
60.6295 (2007)
Fiscal year
1 July - 30 June





Economy of Pakistan
From Wikipedia, the free encyclopedia
Economy of Pakistan

A view of the skyline in Karachi's financial district.

Rank 27th (PPP)
47th (Nominal)
Currency 1 Pakistani Rupee (PKR)
Rs.1 = 100 Paisas

Fiscal year
July 1 – June 30
Trade organisations ECO, SAFTA, ASEAN, WIPO and WTO

Statistics
GDP
$240 billion (nominal) (2012)[1]
$510 billion (PPP) (2011)
GDP growth 3.7% (2012)[2]

GDP per capita $1,378 (nominal; 2012) [3]
$2,800 (PPP; 2011)[4]

GDP by sector agriculture: 21.2%, industry: 25.4%, services: 53.4% (2010 est.)
Inflation (CPI)
16.17% (2009–2010)[5]

Population
below poverty line
24% (2010)[6]

Labour force 55.77 million (2010 est.)
Labour force
by occupation agriculture: 43%, industry: 20.3%, services: 36.6% (2005 est.)
Unemployment 6.2% (2011 est.)
Main industries textiles and apparel, food processing,pharmaceuticals, construction materials,paper products, fertilizer, shrimp

Ease of Doing Business Rank
105th (2012)[7]

External
Exports $30.9 billion (2011 est.)[8][9]

Export goods textiles (garments, bed linen, cotton cloth, yarn), rice, leather goods, sports goods, chemicals, manufactures, carpets and rugs
Main export partners US 15.8%, UAE 7.9%, China 7.3%, UK 4.3%, Germany 4.2% (2010)
Imports $39.9 billion (2011 est.)
Import goods petroleum, petroleum products, machinery, plastics, transportation equipment, edible oils, paper and paperboard, iron and steel, tea
Main import partners China 17.9%, Saudi Arabia 10.7%, UAE 10.6%, Kuwait 5.5%, US 4.9%, Malaysia 4.8% (2010)
Public finances
Public debt 60.1% of GDP (2011 est.)
Revenues 2.463 Trillion PKR ($26.7 billion) (2011 est.)
Expenses 3.767 Trillion PKR ($39.9 billion)(2011 est.)
Credit rating
Standard & Poor's:[10]
B- (Domestic)
B- (Foreign)
B- (T&C Assessment)
Outlook: Stable[11]
Moody's:[11]
B3
Outlook: Stable
Main data source: CIA World Fact Book
All values, unless otherwise stated, are in US dollars

The economy of Pakistan is the 47th largest in the world in nominal terms and 27th largest in the world in terms of purchasing power parity (PPP).Pakistan has a semi-industrialized economy,[12][13][14] which mainly encompasses textiles, chemicals, food processing, agriculture and other industries. Growth poles of Pakistan's economy are situated along the Indus River;[14][15] diversified economies of Karachi and Punjab's urban centers coexist with lesser developed areas in other parts of the country.[14] The economy has suffered in the past from decades of internal political disputes, a fast growing population, mixed levels of foreign investment, and a costly, ongoing confrontation with neighboring India. Foreign exchange reserves are bolstered by steady worker remittances, but a growing current account deficit – driven by a widening trade gap as import growth outstrips export expansion – could draw down reserves and dampen GDP growth in the medium term.[

Major Exports of Pakistan
JULY 21, 2010
Major Exports of Pakistan
1. Raw cotton, Textile products and Cotton yarn.
2. Rice.
3. Leather and leather products.
4. Carpets and rugs, Tents.
5. Synthetic textiles.
6. Surgical instruments.
7. Sports goods.
8. Readymade garments.
9. Vegetable, fruit and fish.
10. Engineering goods.
11. Chemicals and Pharmaceutical products.
Exports of Pakistan
Exports were targeted at $18.6 billion or 12.9 percent higher than last year. Export of food group declined by 3.5 percent. This declined is caused by a 2.6 percent and 14.3 percent decline in exports of rice and fruits. Export of rice declined due to lesser production caused by adverse weather condition which kept the domestic price higher. It was more profitable to sell within the country than to export. Exports of textile manufactures grew by 0.2 percent. Prominent among these are export of knitwear 13.9 percent, readymade garments 6.8 percent, made up articles 8.9 percent, cotton yarn 4.6 percent and towels 2.6 percent. Exports of other textile materials registered a high double digit growth of 17.2 percent. Export of raw cotton, cotton cloth and bed wear on the other hand registered a decline.
Direction of Exports of Pakistan
Although Pakistan trade with a large number of countries its exports are however highly concentrated in few countries including USA, Germany, Japan, UK, Hong Kong, Dubai and Saudi Arabia which account for one-half of its exports. The United States is largest export market for Pakistan, accounting for 28.4 percent of its exports followed by UK and Germany. Japan is fast vanishing as export market for Pakistan as its share in total exports has been on decline for one decade, reaching less than one percent from 5.7 percent a decade ago.
Pakistan needs to diversify its exports not only in terms of commodities but also in terms of markets. Heavy concentration of exports in few commodities and few markets can lead to export instability. Other issues which need to be addressed include low value added and poor quality, obsolete use of machinery and technology, higher wastage of inputs adding to the cost of production, low labor productivity, little spending on research and development, export houses lacking capacity to meet bulk orders, inability to meet requirements of consumers I terms of fashion and design, non-adherence to contracted quality and delivery schedule, lack of marketing techniques etc.



Shifting patterns: Pakistan’s exports tilting to Asia, away from GCC, US
By Farooq Tirmizi
The Middle East and the United States are decreasing in importance as export markets for Pakistan, as exporters increasingly target countries in South Asia and East Asia.
While the European Union is still by far the largest destination for Pakistani exports, South Asia – which includes Afghanistan, Bangladesh, Bhutan, India, Maldives, Nepal, and Sri Lanka – is now the second-most important market for Pakistani products. The EU absorbed 24.6% of Pakistani exports, compared to 28.4% in 2003. By contrast, South Asia used to account for just 6.3% of Pakistani exports in 2003 and is now the destination for 16.7% of Pakistan’s export earnings.
This growth appears to be led by Afghanistan, which is now Pakistan’s second-largest single country market, behind the US. Pakistan exported $3.8 billion worth of goods to the US in 2011 and about $2.7 billion to Afghanistan. The US and Canadian share of Pakistani exports has dropped from 24.7% in 2003 to 16% last year.
Perhaps surprising, however, is the growing importance of East Asia – particularly China – as an export destination for Pakistan. People are familiar with the fact that Pakistan’s imports from China have been rising substantially. Yet most seem unaware that China is also one of the two fastest growing export destinations for Pakistan (the other being Afghanistan). Pakistani exports to China have been growing at 26.3% per year for the last eight years, making China the number four destination for Pakistani exports, up from number 13 eight years ago.
Pakistan’s trade with China is, nonetheless, highly unequal and somewhat colonialist in nature. More than three-quarters of Pakistan’s exports to China are raw materials, with cotton accounting for 70% of goods leaving Pakistan for Chinese ports. (China accounts for more than half of all raw cotton exports from Pakistan.) Meanwhile, China’s exports to Pakistan – which totalled $6.5 billion last year – are mostly electronic equipment and industrial machinery.
An even more surprising fact: the importance of the Gulf Arab states to Pakistan’s exporters appears to be declining rapidly. The Gulf Cooperation Council (GCC) – comprising Saudi Arabia, United Arab Emirates, Kuwait, Qatar, Bahrain and Oman – now accounts for 11.1% of Pakistan’s exports compared to 15% about eight years ago. Much of this shift is attributed to the fact that Pakistan now exports many more goods directly to India, compared to only a few years ago, when the UAE served as a conduit between the two countries.
And despite not granted preferential trade status to Pakistan, the EU has maintained its position as the largest destination for Pakistani exports. Within Europe, the biggest market for Pakistani exporters is Germany, followed by the United Kingdom and Italy.
While Pakistan’s trade balance has been consistently deteriorating over the past few years, it has not done so uniformly. The bulk of the increase Pakistan’s trade deficit can be attributed to higher oil prices, which have taken Pakistani imports from the Gulf to $16.1 billion in 2011, from just $3.8 billion in 2003.
The data on Pakistan’s trade patterns reflects an important point: Pakistan is no different from the rest of the world when it comes to the fact that it relies increasingly on exports to Asia, rather than the older, developed markets of Europe and the US.
However, somewhat distressingly, Pakistan’s exports do not seem to have moved up the value chain: Pakistan’s single biggest export has remained the same since 1972 – raw cotton. Before 1972, the biggest export earner for the country was raw jute from what was then East Pakistan.
And while the increased diversification has meant that Pakistani exporters are now less vulnerable to economic slowdowns in Europe and the US, Pakistan is now more vulnerable than ever to a slowdown in the Chinese economy. In addition, much of the exports to Afghanistan are likely to begin drying up once US forces exit that country in 2014. The picture for Pakistani exports is a lot less rosy than it first appears.


Foreign Debt
Definition of Debt - external: This entry gives the total public and private debt owed to nonresidents repayable in foreign currency, goods, or services. These figures are calculated on an exchange rate basis, i.e., not in purchasing power parity (PPP) terms.

country 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Pakistan
32 38 31.5 32.3 33.54 33.97 38.8 42.38 38.8 44.15 53.62 57.21 61.83


Pakistan’s total debt reaches $130bn

ISLAMABAD: In the absence of credit lines from the international lenders during the last two to three years, Pakistan’s total domestic borrowing has exceeded its foreign debt.
Secretary Economic Affairs Division (EAD) Dr Waqar Masood briefing the National Assembly Standing Committee on EAD on Monday said that domestic borrowings had exceeded the foreign debt, and the country’s total debt had reached up to $130 billion.
“We have to repay between $125 billion and $130 billion as the borrowings are on the rise and the government has to take loans from domestic lenders,” he explained.
The meeting, chaired by Malak Azmat Khan, was informed that World Bank and Asian Development Bank had stopped their programmes and the government was trying to negotiate for a restart.
The committee was informed that Pakistan had received $1.2 billion foreign assistance from July to December 2011 against the total estimates of $3.7 billion made in the federal budget 2011-12.
“Out of the total foreign assistance of $1.2 billion received during the first six months of the current fiscal year, $552.5 million were received from the bilateral donors while $635 million have been received from the multilateral donors,” Dr Masood said.
He added that during the same period last fiscal year total foreign assistance received from July-December 2010 was $679.2 million, which showed that the assistance received this year had increased.
During the first six months of 2011-12, the Asian Development Bank (ADB) disbursed $237 million, the World Bank $ 229 million, China $323 million while Japan released $101 million. Meanwhile, NADRA has been provided $10 million grant by the
World Bank under Citizen’s Damage Compensation Programme (CDCP).
While responding to an objection raised by MNA Sufyan Yusaf, the Secretary claimed that the assistance received from USA from July-December 2011 was much less than the assistance received during the same corresponding period last year.
“From July-December 2011, the USA has released $ 40.9 million while it disbursed $125.8 million during the first six months of the last fiscal year”, he added.
From July-December 2011, Australia released $0.1 million, France $1.6 million, Germany $19.7 million, Korea $101.2 million, Saudi Arabia $49.7 million, and UK disbursed $4 5.1 million, the meeting was informed.
Pakistan is going to become the world’s largest recipient of UK assistance as it was going to enter a program of 1.3 billion pounds with this bilateral for the next five years.
Giving further details, Secretary EAD said that since 2005, Saudi Arabia has disbursed $442 million against the pledged amount of $1.1 billion. Kuwait has disbursed $ 108 million against the pledged $247 million. South Korea has disbursed $18 million
against $261 million pledged amount. Turkey has disbursed $16 million against the pledged $100 million. Iran disbursed nothing but pledged $330 million.


Textile exports fall to $1.09bn in July


Shahnawaz Akhter


KARACHI: Pakistan’s textile exports witnessed a nominal decline of 2.2 percent to $1.09 billion in the first month of the current fiscal year as against $1.116 billion in the corresponding month of the last fiscal year.

According to official figures released by Pakistan Bureau of Statistics (PBS) on Friday, the exports were slightly up i.e. 0.82 percent when compared with $1.08 billion in the last month.

Experts said that due to recession in international markets the demand for Pakistan textile has reduced.

Prices of Pakistan-made textile commodities had decreased in the international market, which is also one of the reasons for reduction in exports, said an expert.

The country’s textile exports came down by 10.38 percent falling from record high of $13.788 billion in 2010-2011 to $12.356 billion in 2011-2012.

Industry sources said that the fall in textile exports was mainly internal due to the worst energy shortage ever experienced by the country.

The commodity-wise exports in textiles showed that export of raw cotton declined sharply by 86.76 percent to $1.5 million during July 2012 as against $11.524 million in July 2011.

Foreign buyers, however, showed interest in cotton yarn as export of this commodity went up by 40.43 percent to $172.2 million as against $122.62 million in the previous year.

The export of cotton cloth came down by 15.28 percent to $201 million this July from $237 million in July 2011.

The export of finished products also fell as Pakistan fetch $197.28 million foreign exchange reserves in knitwear exports as against $228 million. Similarly, bed wear exports came down by 14.61 percent to $156 million as against $183.44 million in the previous corresponding month.

In July 2012, the total exports of the country stood at $2.057 billion, which was lower by 4.84 percent from $2.157 billion in the corresponding month of last fiscal year.
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