Is there a recession in Pakistan?

[TopCat]

guess what? I've decided to consult an expert on the matter, someone who actually knows what he's talking about. now I understand, that people in Pakistan are not used to doing this kind of thing. after all, we believe anything we hear from politicians and journalists, and we take their words as the truth. The people are not used to consulting experts, and instead mock their expertise. However, I seriously think you should read what Niaz sahib had to say about the matter:

Great job indeed. Could you also get some break down data, what exactly pakistan imported on sector by sector.. like consumer products break down, capital machineries etc.. Also I am not getting clues why Pakistan did go backward on textile sector. Also need some information on sector wise FDI and their origin.. These data may help all of us to analyze the actual condition of the economy that time..

 

[Zovc]

wow! teeth maestro, best site for propaganda against musharraf's govt. and has links to pkpolitics, the site for some of the most jahel people on earth! yes, I'm sure "shortcut aziz" stayed until Musharraf's last term of power. I'm sure Soomro did not take over and handle the economy for at least a financial quarter or two. goodness, you people can't read can you? Soomro was in charge for much of the 2007 year, have you forgot about that? Shaukat Aziz was not in charge of the economy during this term. besides, if the reserves were depleting quickly during Shaukat Aziz's era, we would have seen the rupee go past 61 Rs. Did you bother reading my article? it's so easy, even my younger brother can understand.

by the way, how did the new govt. respond to this?

“Can the new elected government take the unpopular step to increase oil prices at the first available opportunity? Or will it allow the subsidy on oil prices to widen the budget deficit and to erode macro-economic stability the way the previous government and the caretakers did? It will be confronted with tough choices.“

simple! they did not remove the subsidies at all! actually they began to subsidize even more! seriously, get real, I've looked for the graph through the cited sources, I've yet to find it. The graph is made up. actually, most of the SBP links given aren't even relevant to the subject!

besides, read my article, it's written by someone credible, a real economist, and they've written in language you can understand. the guy posting on that site doesn't even put forth his qualifications, and instead he's made an expert because he can speak against musharraf? that's exactly what is spread over these jahel news channels.

Dude you are probably one of the most ignorant people on this board. Tell me which figure in that article or graph do you doubt, i shall take it up personally to prove you wrong.

If you are not aware the government removed most of the subsidies when they took over, pushing the prices up to Rs.86 at one point. When they took over the first step was a Rs.10 increment in petrol prices. Yes it is unpopular amongst the uneducated masses but we educated people should look at the facts and than see what is what.

Secondly it does not focus of Shaukat Aziz, rather on Musharraf's ghatiya pan on not increasing the oil prices and letting the economy fall. As the economic team of the caretaker government pointed out, they send repeated requests for approval of increment in oil prices, which is normally for the PM(or acting PM) to decide, but Musharraf over-ruled their requests and denied any increments.

The article is full of valid facts, which i just verified myself.

 

[asaad-ul-islam]

Dude you are probably one of the most ignorant people on this board. Tell me which figure in that article or graph do you doubt, i shall take it up personally to prove you wrong.

If you are not aware the government removed most of the subsidies when they took over, pushing the prices up to Rs.86 at one point. When they took over the first step was a Rs.10 increment in petrol prices. Yes it is unpopular amongst the uneducated masses but we educated people should look at the facts and than see what is what.

Secondly it does not focus of Shaukat Aziz, rather on Musharraf's ghatiya pan on not increasing the oil prices and letting the economy fall. As the economic team of the caretaker government pointed out, they send repeated requests for approval of increment in oil prices, which is normally for the PM(or acting PM) to decide, but Musharraf over-ruled their requests and denied any increments.

The article is full of valid facts, which i just verified myself.

that's funny, I don't remember calling you any names. The govt. did NOT remove subsidies immediately when it first came, it continued to keep subsidies. It only removed them a month or two after. Musharraf wasn't the one running the economy, it was Mian Soomro who had control. anything targeting Musharraf, is always pointed towards Shaukat Aziz, you know that.

as for your threat, go ahead and prove me wrong. go take a good look at the links provided. also, take your time to look at the articles I provided.

 

[asaad-ul-islam]

Great job indeed. Could you also get some break down data, what exactly pakistan imported on sector by sector.. like consumer products break down, capital machineries etc.. Also I am not getting clues why Pakistan did go backward on textile sector. Also need some information on sector wise FDI and their origin.. These data may help all of us to analyze the actual condition of the economy that time..

if this is a reply to my previous post, then I'm not sure what you're getting at. the last post was about oil prices for this year and the last. do you want me to show FDI over a period of 7 years? if so, I'm not going to spend my time doing that, if you were paying attention to the Pakistani economy over the last few years, then you should know about FDI flowing in Pakistan, especially when it took flight a few months ago. also, if you are engaging in a blame game (you deny, but I'm pretty sure you are), please take the time to explain to me what other sectors witnessed growth in pakistan besides textiles. anyways, I think you should read this http://www.defence.pk/forums/247744-post24.html to get a better understanding of why growth in Pakistan was not permanent. I've already explained that in the initial posts I made on this thread.

 

[asaad-ul-islam]

take a look at the date of the article...

UPDATE 2-Pakistan budget cuts subsidies, broadens tax base
Wed Jun 11, 2008

By Sahar Ahmed

ISLAMABAD, June 11 (Reuters) - Pakistan's fledgling government delivered its annual budget on Wednesday aimed at restoring fiscal discipline by slashing food and energy subsidies, while protecting the most needy from raging inflation.

The coalition government, formed in March from parties opposed to President Pervez Musharraf, inherited a fiscal mess.

Previous administrations had let revenue collection slide while taking no action to reduce a mounting subsidy bill resulting from runaway world oil and food commodity prices.

"There is an unbearable burden of subsidies currently carried by the budget," Naveed Qamar, the privatisation minister who became de facto finance minister after a coalition partner quit the cabinet last month.

"A detailed pruning of subsidies is, therefore, necessary and inevitable to preserve the country's finances," Qamar told the National Assembly, parliament's lower house.

Qamar did not say how the cuts would be made, but a document issued alongside the budget statement spoke in broad terms of slashing total subsidies on fuel oil, electricity, fertilisers and food items to 295 billion rupees from 407 billion rupees.

The higher prices resulting from lower subsidies will have a one-time effect on inflation, already running at its highest level in more than three decades.

Qamar said Pakistan needed to bite the bullet in order to stop printing money to fund a ballooning fiscal deficit that stored up longer term inflationary pressures.

There are fears among economists, investors and ordinary people that political infighting will prolong instability in Pakistan and policy-making and implementation will suffer.

"They are in a mess. What relief can we expect from them. They aren't stable," said Beenish Mazhar, a housewife in the northwestern city of Peshawar, who complained she was having to cut back on essentials for her household.

Spending on Pakistan's powerful military was also reined in, with barely a 7 percent increase to 296.07 billion rupees.

Multilateral lenders and friendly governments have begun to step forward with offers of budgetary support.

Otherwise Pakistan would be at risk of sliding into a balance of payments crisis and deeper into a fiscal mire.

INFLATION HIGHEST SINCE MID-SEVENTIES

Despite boosting the total budget outlay by nearly 30 percent to 2,010 billion rupees, Qamar has targeted a fiscal deficit of 4.7 percent in 2008/2009, from a hoped-for 7 percent this year.

The government also hopes to cut the current account deficit to 6 percent of GDP in 2008/09 from this year's 7.3-7.8 percent.

Like other developing nations, Pakistan is faced with surging inflation, and data released on Wednesday showed consumer prices rose 19.27 percent year-on-year in May.

Food and beverage prices alone rose more than 28 percent.

Close to a third of Pakistanis live in poverty, but a World Food Programme official said earlier this year that the number of people at risk of inadequate nourishment because of high food prices had risen to about half the 160 million population.

Only 2.2 million people pay tax, and in a bid to broaden the tax base, Qamar did away with 35 categories of exemptions. He also hit the better-off by hiking import duties on luxury items.

But the stock market got a boost last week, when the government revealed an exemption for share trading from tax on capital gains would be extended for another two years.

The Karachi market's benchmark index .KSE is still down 7.5 percent since the start of the year and 17.3 percent off its life high on April 21 due to political and economic uncertainty.

Prime Minister Yousaf Raza Gilani belongs to the late Benazir Bhutto's Pakistan People's Party (PPP), whose populist pedigree is reflected in its slogan: "Bread, clothing and shelter".

The budget topped up an income support programme to 50 billion rupees, with the aim of providing 1,000 rupees a month to the poorest households.

The government decided to increase the minimum wage to 6,000 rupees ($89) a month from 4,600 rupees, and increased the salaries of government servants and members of the armed forces by 20 percent, but workers representatives were unimpressed.

"Rising prices have broken our backs," said Syed Nazar Hussain Shah, president of the National Federation of Food, Beverages and Tobacco Workers.

UPDATE 2-Pakistan budget cuts subsidies, broadens tax base | Reuters

 

[roadrunner]

They don't have any reply, assad.

What they'll do is to point to one or two examples of an insignificance, that perhaps made a billion or so difference to the economy.

That's it. They don't explain where the extra 100 billion, or 300% increase in GDP came from under Musharraf/Aziz. They have no answer. (For those of you with no idea what GDP means, it is YOUR salary in Pakistan that increased 300% on average under the Musharraf government).

Their next line of thought is to blame all the problems of their criminal idol on the previous government, ridiculous by any measure. Did Aziz know he was going to lose power, so arranged everything so that the Pakistani economy would collapse right after he left? They're not serious, their arguments silly.

 

[Vinod2070]

I don't think the GDP increased by 300% in that small time. It may be the nominal increase before taking into account the rebasing, inflation and currency fluctuations.

No serious economist would consider that a real growth, only novices.

That kind of real growth would require growth rates of >20-30%. I hope no one is suggesting that is what happened!

 

[ajpirzada]

economy did grow under musharraf era. however their political motives didnt do any gud for the country. prices in pakistan werent increased for six months before the elections despite the fact oil prices were goin up. also they didnt add anything to our national grid which is y we saw 6 to 8 hrs of load shedding few months back.

 

[Zovc]

that's funny, I don't remember calling you any names. The govt. did NOT remove subsidies immediately when it first came, it continued to keep subsidies. It only removed them a month or two after. Musharraf wasn't the one running the economy, it was Mian Soomro who had control. anything targeting Musharraf, is always pointed towards Shaukat Aziz, you know that.

as for your threat, go ahead and prove me wrong. go take a good look at the links provided. also, take your time to look at the articles I provided.

How old are you? 13? did you even read the full article?

You dont have a clue about Pakistani politics now do you?

 

[cooldude]

wow 300% gdp growth in 6 years must be the fast growing country in the world ever. Coming to recession, recession is a matter of semantics, according to western economist it is defined as negative gdp growth, but this simplifies the definition too much and doesn't take into account population growth and inflation. I wouldn't want to get into debate of is 3-4% gdp growth recession or not but for developing countries such low growth rates are a great matter of concern and especially with young populations gdp growth rates should be around 6% atleast.

Coming to Musharaff era I dont think a government can screw up economy in six months. If you really want to see how much the country has progressed see its exports in 1997 and 2007 and the nature of exports. If exports are increased in the ratio of gdp growth then without going into details you can say that the country has done well. The reason I say exports will be important because Pakistans growth model was based on Chinas which is export oriented model. But this does not mean that the country has industrialized. If you now want to see that see the nature of exports, if it is capital goods, oil products etc country is getting industrialized. These are some very simple ways to see how good the growth has been. These are like macroindicators and does not give detail understanding of the growth of the country. Finally as suggested by some one above real understanding can be obtained by FDI in which sectors, growth sector wise.