Quarterly Economy Report of State Bank

[sarfrazmayo]

1 | Page
W e d n e s d a y , J u n e 1 1 , 2 0 0 8
SALIENT FEATURES OF PAKISTAN’S ECONOMY
Source: Pakistan Economic Survey 2007-08 issued on 10th June 2008
• GDP grew by 5.8 percent in 2007-08 as against 6.8 percent last year and growth
target of 7.2%. The economy has shown great resilience against internal and
external shocks of extraordinary nature during the out going fiscal year.
Pakistan’s economy has grown at an average rate of almost 6.6 percent per annum
during the last five years.
• Agriculture sector showed dismal performance and grew by 1.5 percent as
against 3.7 percent last year and target of 4.8 percent..
• Overall manufacturing, accounting for 18.9 percent of GDP registered a modest
growth of 5.4 percent against 8.2 percent last year.
• Pakistan’s per capita real GDP has risen at a faster pace in real terms during the
last six years (4.5% per annum on average in rupee terms). The per capita income
in dollar term has grown at an average rate of 13.5 percent per annum during the
last six years rising from $ 586 in 2002-03 to $ 1085 in 2007-08.
• The main factor responsible for the sharp rise in per capita income include four
fold increase in the inflows of workers’ remittances, acceleration in real GDP
growth, and stable exchange rate.
• Fixed investment has declined to 20.0 percent of GDP from 21.3 percent last
year.
• Overall Foreign Investment during the first ten months (July-April) of the
current fiscal year has declined by 32.2 percent and stood at $ 3.6 billion as
against $5.3 billion in the comparable period of last year.
• The agriculture growth this year is estimated at 1.5 percent as compared with
3.7 percent during 2006-07.
• The main contributors to manufacturing sector, the 4.8 percent growth during
July-March 2007-08 were beverages (30.5%), sugar (34.0%), beverages
(30.5%),upper leather (13.5%), cement (17.9%), refrigerators (10.7%) , electric
fans (18.3%), TV sets (19.3%), diesel engines (46.0%), buses (32.1%), motor
cycles (28.1%), and LCV’S (60.5%).
• Total revenues collected during the current year stood at Rs 1545.5 billion,
higher than the targeted level of Rs 1476 billion. However, there are expectations
that the FBR may fall short of its targeted level, and the year is most likely to end
with total tax collections amounting to Rs 1.0 trillion—Rs. 25 billion less than the
original target.
2 | Page
W e d n e s d a y , J u n e 1 1 , 2 0 0 8
• Total expenditure for 2007-08 was budgeted at Rs. 1875 billion. According to
revised estimates this figure stood at Rs 2228.9 billion. Two factors had a
significant impact on the budgetary outlook. Firstly oil prices continued to rise at
a greater pace, reaching as high as $ 115 per barrel in May 2008— an increase of
over 116 percent during the fiscal year. Secondly, the high international price of
oil was not passed on to the domestic consumers. Consequently, the oil subsidy is
projected to rise to Rs 175 billion— over shooting the targeted level by Rs 160
billion. Wheat shortage forced the government to import 1.7 million tons of wheat
at all time high prices.
• By end-June 2007 total domestic debt stood at Rs. 2610.2 billion which was
estimated at 30 percent of GDP. The outstanding stock of domestic debt rose by
Rs 409.9 billion and stood at Rs. 3020.1 billion by end-March 2008 or 30.3
percent of GDP. The domestic debt has increased by 15.7 percent by end-March
2008 over end-June 2007.
• Inflation Rate stood at 10.3 percent during the first ten months (July-April) of the
current fiscal year, 2007-08, as against 7.9 percent in the comparable period of
last year. The food inflation is estimated at 15.0 percent and non-food 6.8 percent,
against 10.2 percent and 6.2 percent in the corresponding period of last year.
• Exports were targeted at $ 19.2 billion or 12.9 percent higher than last year.
Exports during the first ten months (July-April) of the current fiscal year are up by
10.2 percent – rising from $ 13847.3 million to $ 15255.5 million in the same
period last year.
• Pakistan’s export performance has been impressive in recent years (2002-03 to
2005-06) with exports registering an average growth of 16 percent per annum.
Pakistan’s export performance was dismal in 2006-07 as it witnessed abrupt and
sharp deceleration to less than 4 percent. However, when viewed in the back of
last year’s performance, exports managed to recover somewhat this year but its
performance has remained far short of the average growth of 16 percent achieved
during 2002-03 to 2005-06
• Imports were targeted to increase by 5.9 percent in 2007-08 to $ 32.3 billion
from last year’s level of $ 30.5 billion. Imports are up by 28.3 percent during
July-April 2007-08 – rising from $ 25.0 billion to $ 32.0 billion, showing an
increase of almost $ 7.0 billion. The growth in imports increased substantially
owing to unprecedented rise in oil and food prices.
• Major contributions to import bill have come from petroleum groups (40%).
raw material (21%) and food groups (16.3). Almost three-fourth contribution
came from three categories (petroleum, raw material and food group) to this
year’s rise in imports. Interestingly, consumer durables’ contribution was negative
(-0.4%) mainly on account of a decline in the import of road motor vehicles
which registered a decline of 8.6 percent.
3 | Page
W e d n e s d a y , J u n e 1 1 , 2 0 0 8
• Workers’ remittances totaled $ 5.31 billion in the first ten months (July-April)
of the fiscal year as against $ 4.45 billion in the same period last year, depicting
an increase of 19.5 percent. If this trend is maintained workers’ remittances are
likely to touch $ 5.8 billion for the year – the highest ever in country’s history.
• Pakistan’s current account deficit further widened to $ 11.6 billion (6.8% of
GDP) in the first ten months (July-April) of the current fiscal year from 6.6 billion
(4.6% of GDP) in the same period last year. The deterioration in current account
deficit mainly emanated from the sharply widening trade deficit.
• Pakistan’s total foreign exchange reserves stood at $ 12,344 million at the end of
April 2008. However, October 2007 onward, draining of investment and rise in
the current account deficit led to a sharp decline in foreign exchange reserves of
country.
• Pakistan rupee after remaining stable for more than 4 years, lost significant
value against the US dollar, depreciating by 6.4% during July – April 2008.
• External debt at the end of March 2008 was US$ 45.9 billion.
• Male literacy rate increased from 58 percent in 2001 to 67 percent in 2006-07
while it increased from 32 to 42 percent for females during the same period.
• There are currently 231,289 educational institutions in the country. Their over
all enrolment is recorded at 34.84 millions with teaching staff of 1.37 million.
• To promote research and development (R&D) activities, Higher Education
Commission (HEC) has awarded 5,837 PhD scholarships (3,237 indigenous,
2,600 foreign) over the past three years.
• At present there are 945 hospitals, 4755 dispensaries, 5349 basic health units &
sub health centers and 903 maternity and child health centers in Pakistan.
• With the existing number of 127859 doctors, 8195 dentists ,62651 nurses and
103285 hospital beds, the population and health facilities ratio turns out to be
1225 persons per doctor,19121 person per dentist, 2501 persons per nurse and
1517 persons per bed .
• Eighty thousand (80,000) Lady Health Workers (LHWs) have been trained and
deployed mostly in the rural areas.
• Some 7.5 million children have been immunized and 22 million packets of ORS
distributed.
• Various health programs with a special focus on major public health problems
have been carried out. These include the national programs for the prevention of
tuberculosis, malaria, HIV/AIDS, hepatitis, blindness and program on motherchild
health.
4 | Page
W e d n e s d a y , J u n e 1 1 , 2 0 0 8
• The total outlay of health sector budget is Rs.60 billion which is equivalent to 0.6
% of GNP.
• Pakistan’s current population is 160.9 million with a growth rate of 1.80 percent.
The overall vision of the population policy is to achieve population stabilization
by 2020.
• The life expectancy in Pakistan for males is 64 years and for females is 66 years.
• About 2.6 million workers are estimated as un-employed in 2006-07 and
unemployment rate is 5.3 percent.
• Agriculture remains the dominant source of employment in Pakistan. The share
of agriculture in employment has increased from 43 percent in 2003-04 to 43.61
percent by the year 2006-07, with manufacturing (13.54%) and trade(14.43%) &
services(14.41%) absorbing a growing share of the work force.
• The total road network is about 260,000 km of which around 60% is paved..
• Telecom sector continued to show a stellar growth in last few years. Today total
subscriber base stands at 82.5 million (Mar 2008) whereas it was 34.5 million in
2006.
• Currently there are about 3.5 million internet subscribers in Pakistan where total
users crossed 17 million marks. Currently around 3,008 cities are connected to
internet cities.
• Production of crude oil per day has increased to 70,166 barrels during July-
March 2007-08.
• Production of natural gas per day stood at 3,966 million cubic feet during July-
March, 2007-08. The overall production of gas has increased to 1,090,620 million
cubic feet during July-March 2007-08 as compared to 10,62,124 million cubic
feet in the same period last year, showing an increase of 2.7 percent.
• The total installed Electricity generation capacity has increased to 19,566 MW
during July-March 2007-08 from 19,440 MW during the same period last year,
showing a marginal increase (0.65 percent).
• The number of villages electrified increased to 126,296 by March 2007 from
113,605 upto 2005-06, showing an increase of 11.2 percent.
--------------
For the full text of the Economic Survey, please visit:
http://www.finance.gov.pk/finance_economic_survey.aspx