Pakistan’s economy enjoying period of optimism: report

[ameer219]

Pakistan’s economy enjoying period of optimism: report

ISLAMABAD: Visitors to Pakistan are surprised to discover a strong business culture and good roads as the country is mid-table in the World Bank’s ease-of-doing-business rankings, well above India, reports The Economist newspaper.

“Those in search of a thriving stock market, a stable currency and low inflation would not normally pitch up in Pakistan. It is more readily thought of as a pit of instability than as a source of opportunity. Yet Pakistan is enjoying a rare period of optimism about its economy,” The Economist said in a recent article about Pakistan’s economy.

The newspaper while highlighting Pakistan’s economic performance said that International Monetary Fund (IMF) reckons that the economy will grow by 4.7% next year, the fastest rate in eight years. Consumer prices rose by 2.5% in the year to March, the smallest increase for more than a decade. Twice already this year the central bank has lowered its benchmark interest rate.

Some indicators are pointing to an upturn in spending. Compared with a year earlier, cement sales, which are a guide to how much construction is taking place, rose by 5.5% from July to March. Car sales rose by 22% over the same period, the paper said.

It added that a fall of two-fifths in the oil price is a huge slice of luck for a country such as Pakistan. It relies on imported fuel oil for two-fifths of its power supply and is prone to periodic balance-of-payments crises. The country’s import bill can easily overwhelm the foreign-exchange earnings from textile exports and the remittances that Pakistanis working in the Middle East and Europe send home.

In 2013-14 Pakistan’s net import bill for oil came to $12.6 billion, or around 5% of GDP. But if oil prices stay low, Pakistan could save a total of $12 billion in the next three years, the paper said quoting the IMF. The money could be spent on things with more local content and give the economy a lift, it added.

It said that the government of Nawaz Sharif takes some credit for the economy’s new stability. It has stuck to an IMF programme agreed to in 2013, a few months after it came to power in Pakistan’s first-ever handover from one civilian government to another. Foreign-exchange reserves have more than doubled, to $17.7 billion.

Electricity tariffs have been raised, and some unpaid bills collected, easing the cash burden on hard-pressed distribution companies. Tax receipts have risen, albeit from pitiful levels, in response to efforts to broaden the base and cut exemptions, the paper said.

The Economist said that the revenue agency has sent over 150,000 tax notices to non-payers. More retailers are being drawn into the indirect-tax net. A draft budget aims to bring the budget deficit below 4% of GDP in 2015-16, from a peak of over 8%.

A privatisation drive that stalled last June resumed in April, when the government sold its stake in Habib Bank for $1 billion. Three-quarters of bids came from foreign investors. Pakistan’s stockmarket has doubled in dollar terms since the start of 2012, thanks in large part to such foreign interest.

The Economist said that the progress in providing economic stability is encouraging. But Pakistan needs sustained growth of 5-7% a year if it is markedly to cut poverty-at the last count, nearly a quarter of Pakistanis were below the poverty line.

Pakistan’s economy enjoying period of optimism: report - The Express Tribune

 

[M.SAAD]

 

[faisal6309]

Now is there still someone against PMLN?

 

[Matrixx]

Improve your environment and image....countries are even reluctant to play cricket with you in Pakistan

 

[I M Sikander]

Yeh economist bika hua hai. Imran khan

 

[Cyberian]

Good going. All credit goes to the Government of Prime Minister Nawaz Sharif.

Never has Pakistan performed so well economically under democracy as it is doing today. Insha'Allah the greedy military thugs will keep away.

 

[Kambojaric]

Hopefully this economic progress will usher in a new start for democracy in the country. Constructive competition between PML (N) and PTI can establish a healthy democracy in Pakistan. I dont include PPP in the list because we all know that their economic policies only lead to disaster. Almost all major development projects you see in Pakistan today are taking place in Punjab and KPK. Its not a mystery why that is so.

 

[ameer219]

Improve your environment and image....countries are even reluctant to play cricket with you in Pakistan

Oh really?

Just to update you, Kenya has already toured us a few months back. Just in case you are not aware, Zimbabwe will be touring us next month. On the other hand, PCB are negotiating with SLCB for a home tour. It's obvious enough to show that the security situation in Pakistan is improving for countries to tour Pakistan, which you obviously choose not to believe.

Regards
Ameer

 

[niaz]

Until Ayub Khans’ era, Pakistan was ahead of the far Eastern tigers and ahead of India in GDP per capita. Sadly we have been left far behind all these countries. There has to be a genuine reason for this retrogression. In my humble view it is due to the confusion about the ideology of Pakistan.

GDP / economy as a whole is dependent of some key factors. Prominent among these in case of developing economies is creation of jobs which in turn increases disposal income and consequently increasing consumer spending leading to demand led economic growth of the economy.

In my view there are three key factors in the development of a country’s economy and job creation.

Governance.

Per capita incomes and the quality of governance are strongly positively correlated across countries. Results show not just that people are more satisfied with their lives in countries having better governance quality

During the boom years of the Musharraf era, growth rate in excess of 6% were achieved primarily due to increase in the construction sector of the economy. As mentioned in the June 2014 post of Hon RiazHaq, domestic savings rate reached 18% of the GDP and foreign direct investment (FDI) hit a record level of $5.4 billion in 2007-8. This combination of domestic and foreign investments nearly tripled the size of the economy from $60 billion in 1999 to $170 billion in 2007and exports nearly tripled from about $7 billion in 1999-2000 to $22 billion in 2007-2008, adding millions of more jobs.

No doubt that Musharraf had a windfall after the 2011, nevertheless, it cannot be denied that governance as a whole was far better under 8 years of Musharraf.

Despite direct remittances of about 1-billion dollars per month by non-resident Pakistanis; during the succeeding 5 years, public debt surged to Rs 15 trillion in 2013 as compare to Rs 4.5 trillion of 2007. According to Umar Ayub khan,; the country is facing Rs 1200 to Rs 1400 billion loss annually in term of revenue collection due to ongoing energy crisis that was created artificially in order to introduce rental power plants. Khan further said that debt increased by Rs two trillion only due to the rupee depreciation against the US dollar, as its value went down to Rs100 in 2013 as compare to Rs 60 of 2007. Similarly, the foreign direct investment remained at lowest ebb during the five years of the incumbent government. Former State Minister for Finance and Economic Affairs noted that food inflation increases manifold, budget deficit has gone up, economic growth remained at the lowest side during the five years tenure of PPP-led coalition government.

Dr Ashfaque Hasan Khan, an eminent economist while talking to The Nation stated that
country’s economic growth at average remained at lower side of three percent; unemployment increases resulting in higher poverty rate”, said. He added that budget deficit remained at higher side and public debt surged to Rs 13 trillion in 2013 from Rs 5 trillion of 2008. Interest payment increased due to hike in public debt, as country spent Rs 1200 billion on interest payment in last year, which is almost 56 percent of the tax collection of the country.

The country’s public sector enterprises such as Pakistan International Airlines, Pakistan Steel Mills and Pakistan Railways are ailing due to mismanagement and blatant inefficiencies in last five years and so. The government has reportedly violated the rules in hiring the staff/officials in public sector entities and more than required staff was recruited in PSEs leading to huge financial losses. For example Pakistan Steel Mills faced financial loss of Rs 25.52 billion during the first fiscal year of the incumbent government i.e. 2008-9, Rs 11.56 billion in 2009-10, Rs 12.43 billion in 2010-11 and Rs 21.43 billion in 2011-12.

Pakistan International Airlines is also in a sad state of affairs as total borrowing touched Rs157.165 billion till November 30, 2012 against Rs 42.5 billion in 2008 when the government took charge. Hundreds of unnecessary recruitments were made in PIA on political basis that could be gauged by the fact that there were 600 pilots for 26 aeroplanes - 23 pilots for one plane. Similarly, it was confirmed that PIA’s per aircraft human strength is 482 people whereas in a private airline there are only 125 people staff per aircraft.
Pakistan Railways

Pakistan Railways suffered a loss of Rs 40 billion during the last four years since the incumbent government took charge in 2008. Total losses of Pakistan Railways were around Rs 17 billion when the government came into power in 2008.

Murtaza Haider his artcle published in the Dawn of March 16, 2013 titled “Five years on: A poorer, hungrier nation. PPP governments have a history of corruption, bad governance and bad economic policies going back all the way to the ZAB which killed off entrepreneurship in Pakistan thru his nationalization of near all the economic growth growth engines, such as basic industries, banking & finance institutions & the schools which are primary engines of human development.

Let us face it, PPP neither know or care about economic growth, all they care is about lining up their pockets. Regret to say that neither the succeeding new Nawaz government at the Federal level nor the new Provincial governments have shown any real signs of improvement on governance. Steel Mill, Pakistan Railways & PIA still remain white elephants to the tax payer.

Energy demand growth.

It is common knowledge that energy plays a key role in economic growth, conversely economic growth causes total energy consumption. In short both are strongly related and dependent on each other. It has also a fact that energy consumption also directly causes employment.

Members of this forum are aware that everyone has been crying about the severe gas & power shortage for the last 6 years but resolution is at least a couple of years away.

Irony is that Pakistan suffered from motor gasoline shortage for the first time in her history during PML-N government. Nevertheless the Ministers directly responsible, the Oil minister & the Finance Minister, were declared blameless. Instead minor bureaucrats, who had warned gov’t in writing time & again, lost their job!!! This shows how just Nawaz Sharif really is in his decision making? Does one really expect economic boom with such governance?


Law & order.

It is widely assumed that the rule of law is essential for economic growth. Stephan Haggard, in his paper “The Rule of Law and Economic Growth: Where Are We?” at the Texas School of Law Conference on Measuring the Rule of Law March 25-26, 2010 stated that maintenance of property rights and the rule of law are central for investment and other aspects of economic activity. These kinds of factors have been assessed by a number of consulting companies, including Political Risk Services in the International Country Risk Guide.

In Pakistan; promise of heaven after in afterlife and lure of a Dark Age Islamic emirate which has been exploited to the full by the religious parties, TTP & Al-Qaida; put a stop to FDI during the last 7 years. Nevertheless many political party leaders, including the oxford educated Imran Khan, were against taking any action against the TTP. Had it not been the new COAS Raheel Shareef, there would have no action in North Waziristan or in Karachi.

How can we expect investment in the country when no one is safe from kidnapping for ransom or sectarian killing? This remains so, that is why 9 army battalions would be deployed just to protect Chinese economic corridor? How can a country achieve decent economic growth under such circumstances?


Conclusion

Asian development outlook 2015 states that GDP growth in Pakistan is projected at 4.2% in FY2015 and 4.5% in FY2016, underpinned by low international oil prices and the expected uptick in economic growth in advanced economies. The projections assume steady progress in macroeconomic and structural reforms, manageable political and security challenges, and normal weather. Growth in FY2016 could be higher if economic reform proceeds at a faster pace. The government has made some progress in implementing macroeconomic and structural reforms to strengthen its fiscal position, alleviate energy shortages, and restructure and privatize loss-making public enterprises. However, progress remains slow in a challenging political and security environment.

Economic strength is directly related to defence capabilities. We would be perpetually under threat from India until such time that we are economically strong. However, if we are ever going to catch with our giant neighbour India in terms of economic well being; there has to be a paradigm shift the attitude of the people. This is certainly not going to happen if we keep on electing the PMN-N & PPP. One would have hoped that Imran Khan would bring in a breath of fresh air; sadly it is not to be. He is surrounded by the people who have served previous governments. Also evidenced from his dealings with justice Wajihuddin; Imran appears to have the same dictatorial attitude as Nawaz Sharif & Zardari,

People think that Chinese investment would a panacea for our ills, will it? Provinces are already at odds on the route the economic corridor is going to take.

 

[Fracker]

Nice to see Pakistan is heading towards prosperity.

After worst PPP 5 years, anything could be better then past. But our hopes was high from independent federal government, which if willing could have change the country outlook. There is no sense of urgency in solving core issues. Things are happening, but speed is slow. I believe government couldn't take much out of Pak China economy corridor. This deal could have finalised in march last year, but it was delayed after delay the dharna came.

Still governance model is lacking far behind in civil law and order, tax collection, and main energy crisis for which this government came.

Half of the tenour went with snailing speed, but stage is set. I hope Government can pull out and speed up in next 3 years. Since this invadeable in current competent world.

 

[Viper0011.]

Governance.
During the boom years of the Musharraf era, growth rate in excess of 6% were achieved primarily due to increase in the construction sector of the economy.

Dr Ashfaque Hasan Khan, an eminent economist while talking to The Nation stated that country’s economic growth at average remained at lower side of three percent; unemployment increases resulting in higher poverty rate”, said. He added that budget deficit remained at higher side and public debt surged to Rs 13 trillion in 2013 from Rs 5 trillion of 2008.

Murtaza Haider his artcle published in the Dawn of March 16, 2013 titled “Five years on: A poorer, hungrier nation.

Let us face it, PPP neither know or care about economic growth, all they care is about lining up their pockets. Regret to say that neither the succeeding new Nawaz government at the Federal level nor the new Provincial governments have shown any real signs of improvement on governance. Steel Mill, Pakistan Railways & PIA still remain white elephants to the tax payer.

Conclusion

Asian development outlook 2015 states that GDP growth in Pakistan is projected at 4.2% in FY2015 and 4.5% in FY2016, underpinned by low international oil prices and the expected uptick in economic growth in advanced economies.

Economic strength is directly related to defence capabilities.

Why give this guy a positive rating and so many good ratings???? This is black and white paid journalism. He makes a few points but is overall VERY biased from the reality.

1) He's pro-military, as he's credits Musharraff's and outlined the "growth" rate. Totally disqualifying the fact that Musharaff didn't know JACK about the economy. The growth was a BIG Thank You to Uncle Sam in the United States. The 10 billion poured in, went towards construction and even at that, projects under taken by the military or its associated branches, being run by ex-generals, such as Defense housing society expansion, logistics to transport NATO supplies from Karachi to Kabul, etc, etc. There wasn't a "plan" or a "Strategy" to grow the economy, it was just there because of the cash the US was pumping in. Cash out, Musharraf out and BAM, the economy hits the ditch. So bad, that when the current government came into power, according to foreign institutes, the country had a few hundred million left in its account. Today....that number is the highest in Pakistan's history. The savings account has over $ 17 trillion dollars and expected to reach closer to $ 20 billion by December, 2015. That is HUGE!!! Never has that happen before so you can see the progress by this one example only.

2) The guy is giving out old school numbers from $ 2013 in terms of debt. The system has actually seen a huge deflation due to oil prices and due to Chinese pumping investments in.

3) The stock market's volume went from high risk to stable and then in 2014, one of the top 5 markets with the best returns to investors listed by Bloomberg!!! The volume has doubled, adding many billion from in stock investments from around the globe. What is the writer smoking? He or she needs to get off the pipe as too much nicotine is dangerous for proper mental activity as well as for general health.

4) He's blaming PPP and NS for the downfall.....totally forgetting that if the 8-10 years of Musharraff's rule were done by a business savvy Prime Minister elected democratically, where Pakistan is today, it could've been there in 2004!!! And today, it would be where it would actually be in 2025. Time is always the most critical element. The destruction of the economy was a direct result of a military general running the country like he was running a war.

The entire credit goes to the current government here. They've set the foundation of the new Pakistan and there is nothing but high growth for the next 4 decades. These guys have literally changed the future of Pakistan and its 200 million people.

Even the military generals at the top have started to realize that. In fact, in a recent meeting, Gen. Raheel assured PM in front of a few of his senior generals that the military is behind the civilian government in conducting an operation in Sindh / Karachi when the order will be given. And that they appreciate the approval for advance defense purchases, which would be impossible if this was 2013!!

Clearly, these guys have seen what a real civilian government can do in a few years to a country, even with many problems. This is why a system is so important and democracy should always remain intact.

I am done commenting on this article which has a few good points, but then its written to bash the Civilian / Democratically elected government for stuff from 2013 (When they just took the office!!! and no one it mentions how life would be if Mushy wasn't in the picture and the elected government kept running from 1999 - 2010).

 

[Matrixx]

Oh really?

Just to update you, Kenya has already toured us a few months back. Just in case you are not aware, Zimbabwe will be touring us next month. On the other hand, PCB are negotiating with SLCB for a home tour. It's obvious enough to show that the security situation in Pakistan is improving for countries to tour Pakistan, which you obviously choose not to believe.

Regards
Ameer

Kenya Zimbabwe is not your standard....how about last 7-8 years....dont be in denial...except the problem and work on it

 

[ameer219]

Kenya Zimbabwe is not your standard....how about last 7-8 years....dont be in denial...except the problem and work on it

One thing is for sure, arguing with you on your one-liners is definitely not my "standard".

Regards
Ameer