Economy of Pakistan
Encyclopedia
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, which mainly encompasses textiles, chemicals, food processing
, agriculture
and other industries. Growth poles of Pakistan's economy are situated along the Indus River
; diversified economies of Karachi
and Punjab
's urban centers coexist with lesser developed areas in other parts of the country. 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
. However, IMF-approved government policies, bolstered by foreign investment and renewed access to global markets, have generated solid macroeconomic recovery the last decade. Substantial macroeconomic reforms since 2000, most notably at privatizing the banking sector have helped the economy.
GDP growth, spurred by gains in the industrial and service sectors, remained in the 6-8% range in 2004-06 due to economic reforms in the year 2000 by the Musharraf government. In 2005, the World Bank
named Pakistan the top reformer in its region and in the top 10 reformers globally. Islamabad
has steadily raised development spending in recent years, including a 52% real increase in the budget allocation for development in FY07, a necessary step toward reversing the broad underdevelopment of its social sector. The fiscal deficit - the result of chronically low tax collection and increased spending, including reconstruction costs from the devastating Kashmir earthquake
in 2005 was manageable.
Inflation
remains the biggest threat to the economy, jumping to more than 9% in 2005 before easing to 7.9% in 2006. In 2008, following the surge in global petrol prices inflation in Pakistan reached as high as 25.0%. The central bank is pursuing tighter monetary policy while trying to preserve growth. 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.
rate since independence has been higher than the average growth rate of the world economy during the period. Average annual real GDP growth rates were 6.8% in the 1960s, 4.8% in the 1970s, and 6.5% in the 1980s. Average annual growth fell to 4.6% in the 1990s with significantly lower growth in the second half of that decade. See also
During the 1960s, Pakistan was seen as a model of economic development around the world, and there was much praise for its economic progression. Karachi was seen as an economic role model around the world, and there was much praise for the way its economy was progressing. Many countries sought to emulate Pakistan's economic planning strategy and one of them, South Korea
, copied the city's second "Five-Year Plan" and World Financial Center in Seoul is designed and modeled after Karachi. Later, economic mismanagement in general, and fiscally imprudent economic policies in particular, caused a large increase in the country's public debt and led to slower growth in the 1970s and 1990s.The economy recovered during the 1980s via a policy of deregulation, as well as an increased inflow of foreign aid and remittances from expatriate workers.
{| class="wikitable"
|-
! Year || Gross Domestic Product || US Dollar Exchange || Inflation Index
(2000=100) || Per Capita Income
(as % of USA)
|-
| 1960 || 20,058 || 4.76 Pakistani Rupees || || 3.37
|-
| 1965 || 31,740 || 4.76 Pakistani Rupees || || 3.40
|-
| 1970 || 51,355 || 4.76 Pakistani Rupees || || 3.26
|-
| 1975 || 131,330 || 9.91 Pakistani Rupees || || 2.36
|-
| 1978 || 283,460 || 9.97 Pakistani Rupees || 21 || 2.83
|-
| 1985 || 569,114 || 16.28 Pakistani Rupees || 30 || 2.07
|-
| 1990 || 1,029,093 || 21.41 Pakistani Rupees || 41 || 1.92
|-
| 1995 || 2,268,461 || 30.62 Pakistani Rupees || 68 || 2.16
|-
| 2000 || 3,826,111 || 51.64 Pakistani Rupees || 100 || 1.54
|-
| 2005 || 6,581,103 || 59.86 Pakistani Rupees || 126 || 1.71
|-
) has grown every year since a 1951 recession
. Despite this record of sustained growth, Pakistan's economy had, until a few years ago, been characterized as unstable and highly vulnerable to external and internal shocks
. However, the economy proved to be unexpectedly resilient in the face of multiple adverse events concentrated into a four-year (1998–2002) period —
Despite these adverse events, Pakistan's economy kept growing, and economic growth accelerated towards the end of this period. This resilience has led to a change in perceptions of the economy, with leading international institutions such as the IMF, World Bank, and the ADB praising Pakistan's performance in the face of adversity.
After the highly destructive 2005 earthquake
, Pakistan's economy kept expanding, growing by over 7% in the twelve months ending June 30, 2006.
Pakistan emerged as one of the best performers in the wake of the global financial crisis, even as the country waged a costly war against militants. Its domestically-driven economy was minimally affected and its banking sector boasted surplus liquidity while remaining unharmed. However the impact was seen for export sectors which shrank as a result of lower external demand. ref>
According to many sources, the Pakistani government has made substantial economic reforms since 2000, and medium-term prospects for job creation and poverty reduction are the best in nearly a decade.
Government revenues have greatly improved in recent years, as a result of economic growth, tax reforms - with a broadening of the tax base, and more efficient tax collection as a result of self-assessment schemes and corruption controls in the Central Board of Revenue
- and the privatization of public utilities and telecommunications. Pakistan is aggressively cutting tariffs and assisting exports by improving ports, roads, electricity supplies and irrigation projects. Islamabad has doubled development spending from about 2% of GDP in the 1990s to 4% in 2003, a necessary step towards reversing the broad underdevelopment of its social sector.
Liberalization in the international textile trade has already yielded benefits for Pakistan's exports, and the country also expects to profit from freer trade in agriculture. As a large country, Pakistan hopes to take advantage of significant economies of scale, and to replace China as the largest textile manufacturer as the latter China moves up the value-added chain. These industries play to Pakistan's relative strengths in low labor costs.
Growing stability in the nation's monetary policies has contributed to a reduction in money-market interest rates, and a great expansion in the quantity of credit, changing consumption and investment patterns in the nation. Pakistan's domestic natural gas
production, and its significant use of CNG
in automobiles, has cushioned the effect of the oil-price shock
of 2004-2005. Pakistan is also moving away from the doctrine of import substitution which some developing countries (such as Iran) dogmatically pursued in the twentieth century. The Pakistani government is now pursuing an export-driven model of economic growth successfully implemented by South East Asia and now highly successful in China
.
In 2005, the World Bank
reported that
2010 ranked Pakistan 85 among 181 countries around the globe. Pakistan comes highest in South Asia but also ranks higher than China, Russia and India which is at 133. The top five countries are Singapore, New Zealand, the United States, Hong Kong and United Kingdom.
The Government of Pakistan
has granted numerous incentives to technology companies wishing to do business in Pakistan. A combination of decade-plus tax holiday
s, zero duties
on computer imports, government incentives for venture capital
and a variety of programs for subsidizing technical education, are intended
there.
During the mid-2000s, Pakistan experienced a period of tremendous growth, averaging 7% yearly GDP growth between 2003-07. Due to its large population of 186 million, it was included in 2005 by the Goldman Sachs Global Economics Group as one of the "Next Eleven
(N-11)" – a group of countries with economies that “might have the kind of potential for global impact that the BRICs projections highlighted, essentially an ability to match the G7 in size”.
By October 2007, Pakistan raised back its Foreign Reserves to a handsome $16.4 billion. Exceptional policies kept Pakistan's trade deficit controlled at $13 billion, exports boomed to $18 billion, revenue generation increased to become $13 billion and attracted foreign investment of $8.4 billion.
Since the beginning of 2008, Pakistan's economic outlook has taken stagnation. Security concerns stemming from the nation's role in the War on Terror
have created great instability and led to a decline in FDI from a height of approximately $8 bn to $3.5bn for the current fiscal year. Concurrently, the insurgency has forced massive capital flight from Pakistan to the Gulf. Combined with high global commodity prices, the dual impact has shocked Pakistan's economy, with gaping trade deficits, high inflation and a crash in the value of the Rupee, which has fallen from 60-1 USD to over 80-1 USD in a few months. For the first time in years, it may have to seek external funding as Balance of Payments support. Consequently, S&P lowered Pakistan’s foreign currency debt rating to CCC-plus from B, just several notches above a level that would indicate default. Pakistan’s local currency debt rating was lowered to B-minus from BB-minus. Credit agency Moody’s Investors Service cut its outlook on Pakistan’s debt to negative from stable due to political uncertainty, though it maintained the country’s rating at B2.The cost of protection against a default in Pakistan’s sovereign debt trades at 1,800 basis points, according to its five year credit default swap, a level that indicates investors believe the country is already in or will soon be in default.
The middle term however may be less turbulent, depending on the political environment. The EIU estimates that inflation should drop back to single digits in 2010, and that growth should pick up to over 5% per annum by 2011. Although less than the previous 5 year average of 7%, it would represent an overcoming of the present crisis wherein growth is a mere 3.5-4%.
Economic comparison of Pakistan 1999-2008
{| class="wikitable"
|-
! Indicator || 1999 || 2007 || 2008 || 2009
|-
| GDP || $ 75 billion || $ 160 billion || $ 170 billion || $ 185 billion
|-
| GDP Purchasing Power Parity (PPP) || $ 270 billion || $ 475.5 billion || $ 504 billion || $ 545.6 billion
|-
| GDP per Capita Income || $ 450 || $ 925 || $1085 || $1250
|-
| Revenue collection || Rs. 305 billion || Rs. 708 billion || Rs. 990 billion || Rs. 1.05 trillion
|-
| Foreign reserves || $ 1.96 billion || $ 16.4 billion || $ 8.89 billion || $ 17.21 billion
|-
| Exports || $ 7.5 billion || $ 18.5 billion || $ 19.22 billion || $ 18.45 billion
|-
| Textile Exports || $ 5.5 billion || $ 11.2 billion || - || -
|-
| KHI stock exchange (100-Index) || $ 5 billion at 700 points || $ 75 billion at 14,000 points || $ 46 billion at 9,300 points || $ 26.5 billion at 9,000 points
|-
| Foreign Direct Investment || $ 1 billion || $ 8.4 billion || $ 5.19 billion || $ 4.6 billion
|-
| External Debt & Liabilities || $ 39 billion || $ 40.17 billion || $ 45.9 billion || $ 50.1 billion
|-
| Poverty level || 34% || 24% || - || -
|-
| Literacy rate || 45% || 53% || - || -
|-
| Development programs || Rs. 80 billion || Rs. 520 billion || Rs. 549.7 billion || Rs. 621 billion
|}
Economic Comparison 1999-2008
was the best-performing stock market index
in the world as declared by the international magazine “Business Week”. The stock market capitalisation of listed companies in Pakistan was valued at $5,937 million in 2005 by the World Bank
. But in 2008, after the General Elections, uncertain political environment, rising militancy along western borders of the country, and mounting inflation and current account deficits resulted in the steep decline of the Karachi Stock Exchange
. As a result, the corporate sector
of Pakistan has declined dramatically in recent times.
However the market bounced back strongly in 2009 and the trend continues in 2011.
The Federal Bureau of Statistics valued the finance and insurance sector at Rs.311,741 million in 2005 thus registering over 166% growth since 2000. A reduction in the fiscal deficit had resulted in less government borrowing in the domestic money market, lower interest rates, and an expansion in private sector lending to businesses and consumers.
, the size of the Pakistani middle class, under prevailing economic conditions is estimated at 20 million, out of a population of 180 million. Representing 11% of the population of the country.
On measures of income inequality
, the country ranks slightly better than the median. In late 2006, the Central Board of Revenue
estimated that there were almost 2.8 million income-tax payers in the country.
Poverty levels have decreased by 10% since 2001 Foreign Companies which provide for Pakistani middle classes have been very successful. For example, demand for Uniliver products have recently been so high that even after doubling production the Anglo-Dutch company struggled to meet demand and it's Chairman stated "Pakistanis can’t seem to have enough".
Pakistan government spent over 1 trillion Rupees (about $16.7 billion) on poverty alleviation programs during the past four years, cutting poverty from 35% in 2000-01 to 24% in 2006. Rural poverty remains a pressing issue, as development there has been far slower than in the major urban areas.
of over $3000 (PPP
, 2006) compared with $2600 (PPP
, 2005) in 2005 the World Bank considers Pakistan a medium-income country, it is also recorded as a "Medium Development Country" on the Human Development Index
2007. Pakistan has a large informal economy, which the government is trying to document and assess. Approximately 56% of adults are literate, and life expectancy is about 64 years. The population, about 168 million in 2007, is growing at about 1.80%.
Relatively few resources in the past had been devoted to socio-economic development or infrastructure projects. Inadequate provision of social services, high birth rates and immigration from nearby countries in the past have contributed to a persistence of poverty. An influential recent study concluded that the fertility rate peaked in the 1980s, and has since fallen sharply. Pakistan has a family-income Gini index of 41, close to the world average of 39.
In late 2006, the government launched an ambitious nationwide service employment scheme aimed at disbursing almost $2 billion over five years.
Mean wages were $0.98 per manhour in 2009.Rate of unemployment is 25%.
High inflation
and limited wage growth have drawn more women into the workforce to feed their families, in spite of cultural resistance and domestic abuse over the issue.
is a growing industry. Major attractions include ruins of Indus valley civilization and mountain resorts in the Himalayas
. Himalayan and Karakoram
range (which includes K2
, the second highest mountain peak in the world, attracts adventurers and mountaineers from around the world. Karachi and Lahore are major attractions for authentic Pakistani food and culture.
The Federal Board of Revenue collected nearly one trillion rupees ($14.1 billion) in taxes in the 2007-2008 financial year, while it collected about 1558 billion ($18.3 billion) during FY 2010-2011. The revenue collection has hovered below 10% of the GDP for the past several years. The Federal Board of Revenue mainly relies on indirect taxation, and most of the Income Tax is also collected indirectly, in the form of withholding taxes.
, ISO code PKR and abbreviated Rs, which is divided into 100 paisas. Currently the newly printed 5,000 rupee note is the largest denomination in circulation. Recently the SBP has introduced all new design notes of Rs. 5, 10, 20, 50, 100, 500, 1000, and 5000 denomination, while the design work of Rs.10,000 note is in progress which will help the banking industry in keeping few notes in saving accounts. The new notes have been designed using the euro technology and are made in eye-catching bright colours and bold, stylish designs.
The Pakistani Rupee was pegged to the Pound sterling
until 1982, when the government of General Zia-ul-Haq, changed it to managed float. As a result, the rupee devalued by 38.5% between 1982/83 many of the industries built by his predecessor suffered with a huge surge in import costs. After years of appreciation under Zulficar Ali Bhutto and despite huge increases in foreign aid the Rupee depreciated.
The Pakistani rupee depreciated against the US dollar until the turn of the century, when Pakistan's large current-account surplus pushed the value of the rupee up versus the dollar. Pakistan's central bank then stabilized by lowering interest rates and buying dollars, in order to preserve the country's export competitiveness
{| class="wikitable" style="float:right;margin-left:2ex"
|+PKR per US dollar 1995-2008
! style="background:#ececec;" rowspan="2"|Year
!rowspan=16|
!colspan=2 style="background:#ececec; line-height: 1.1em"|Highest ↑
!rowspan=16|
!colspan=2 style="background:#ececec; line-height: 1.1em"|Lowest ↓
|-
! style="background:#ececec; line-height:1.1em;"|Date
! style="background:#ececec; line-height:1.1em;"|Rate
! style="background:#ececec; line-height:1.1em;"|Date
! style="background:#ececec; line-height:1.1em;"|Rate
|-
!1995
|
|style="background:yellow"|PKR 30.930
|
|
|-
!1996
|
|
|
|PKR 35.266
|-
!1997
|
|PKR 40.185
|
|
|-
!1998
|
|PKR 44.550
|
|
|-
!1999
|
|PKR 51.90
|
|
|-
!2000
|
|PKR 53.6482
|
|
|-
!2001
|
|PKR 61.9272
|
|
|-
!2002
|
|PKR 59.7238
|
|
|-
!2003
|
|PKR 57.752
|
|
|-
!2004
|
|PKR 58.000
|
|
|-
!2007
|Aug 05
|PKR 60.75
|Nov 01
|PKR 60.50
|-
!2008
|October 10
|style="background:yellow"|PKR 80.00
|Apr 01
|PKR 63.50
|-
|colspan="7" style="font-size:90%; line-height: 1em; background:#F2F2F2"|Source: PKR exchange rates in USD, SBP
|}
On October 11, 2008 State Bank of Pakistan
reported that country's foreign exchange reserves had gone down by $571.9 Million to $7749.7 Million. The foreign exchange reserves had declined more by $10 billion to an alarming rate of $6.59 billion. In September 2010 According the State Bank Of Pakistan Pakistan's Foreign Reserves Stood at $16.99 Billion.
Over 1,081 patent applications were filed by non-resident Pakistanis in 2004 revealing a new-found confidence.
Agriculture accounted for about 53% of GDP in 1947. While per-capita agricultural output has grown since then, it has been outpaced by the growth of the non-agricultural sectors, and the share of agriculture has dropped to roughly one-fifth of Pakistan's economy.
In recent years, the country has seen rapid growth in industries (such as apparel, textiles, and cement) and services (such as telecommunications, transportation, advertising, and finance).
Pakistan is one of the world's largest producers of the following commodities according to FAOSTAT, the statistical arm of the Food and Agriculture Organization
of The United Nations, given here with the 2008 ranking:
Pakistan's principal natural resources are arable land
and water. About 25% of Pakistan's total land area is under cultivation and is watered by one of the largest irrigation systems in the world. Pakistan irrigates three times more acres than Russia. Agriculture accounts for about 23% of GDP and employs about 44% of the labor force. Zarai Taraqiati Bank Limited is the largest financial institution geared towards the development of agriculture sector through provision of financial services and technical know how.
{| style="margin:1em; background:#f9f9f9; border:1px #aaa solid; border-collapse:collapse; font-size:95%; float:right;"
|+Pakistan's two leading companies, as per Forbes Global 2000
ranking for 2011.
|- style="background:limegreen;"
! Global
ranking !! Company Name
|-
| 1,429 || Oil & Gas Development
|-
| 1,995 || PSO
|-
| Forbes Global 2000 ||
|}
Pakistan's industrial sector accounts for about 24% of GDP. Cotton textile production and apparel manufacturing are Pakistan's largest industries, accounting for about 66% of the merchandise exports and almost 40% of the employed labour force. Other major industries include cement, fertilizer, edible oil, sugar, steel, tobacco, chemicals, machinery, and food processing.
The government is privatizing large-scale parastatal units, and the public sector accounts for a shrinking proportion of industrial output, while growth in overall industrial output (including the private sector) has accelerated. Government policies aim to diversify the country's industrial base and bolster export industries.
) in the world. Presently, more than 3,000 CNG stations are operating in the country in 99 cities and towns, and 1000 more would be set up in the next two years. It has provided employment to over 50,000 people in Pakistan.
and was rated as the 30th best location for offshoring
. By 2009, Pakistan had improved its rank by ten places to reach 20th.
In the recent past, exploration by government agencies as well as by multinational mining companies presents ample evidence of the occurrences of sizeable minerals deposits. Recent discoveries of a thick oxidized zone underlain by sulphide zones in the shield area of the Punjab province, covered by thick alluvial cover have opened new vistas for metallic minerals exploration. Pakistan has a large base for industrial minerals. The discovery of coal deposits having over 175 billion tones of reserves at Thar in the Sindh province has given an impetus to develop it as an alternate source of energy. There is vast potential for precious and dimension stones.
The enforcement of Mineral Policy (1995) has paved the way to expand mining sector activities and attract international investment in this sector. International mining companies have responded favorably to the NMP and presently at least four are engaged in mineral projects development.
Currently about 52 minerals are under exploitation although on small scale. The major production is of coal, rock salt and other industrial and construction minerals. The current contribution of the mineral sector to the GDB is about 0.5% and likely to increase considerably on the development and commercial exploitation of Saindak & Reco Diq copper and gold deposits (world's largest gold mine), Duddar zinc lead, Thar coal and gemstone deposits.
Pakistan's service sector accounts for about 53.3% of GDP. Transport
, storage
, communications
, finance
, and insurance account for 24% of this sector, and wholesale and retail trade about 30%. Pakistan is trying to promote the information industry
and other modern service industries
through incentives such as long-term tax holidays
.
The government is acutely conscious of the immense job growth opportunities in service sector and has launched aggressive privatisation of telecommunications, utilities and banking despite union unrest.
After the deregulation
of the telecommunication industry, the sector has seen an exponential growth. Pakistan Telecommunication Company Ltd
has emerged as a successful Forbes 2000 conglomerate with over US $1 billion in sales in 2005. The mobile telephone market has exploded fourteen-fold since 2000 to reach a subscriber base of 91 million users in 2008, one of the highest mobile teledensities in the entire world. In addition, there are over 6 million landlines in the country with 100% fibre-optic network and coverage via WLL in even the remotest areas. As a result, Pakistan won the prestigious Government Leadership award of GSM Association
in 2006.
The contribution of the telecom sector to the national exchequer increased to Rs 110 billion in the year-end 2007-08 on account of the general sales tax, activation charges and other steps as compared to Rs 100 billion in the year-end 2006-07.
The World Bank estimates that it takes about 3 days to get a phone connection in Pakistan.
In Pakistan, the following are the top mobile phone operators:
By March 2009, Pakistan had 91 million mobile subscribers - 25 million more subscribers than reported in the same period in 2008. In addition to the 3.1 million fixed lines, while as many as 2.4 million are using Wireless Local Loop connections. Sony Ericsson, Nokia and Motorola along with Samsung and LG remain the most popular brands among customers.
Pakistan is on the verge of a telecom revolution and is by far the most attractive sector in Pakistan in terms of Foreign Direct Investment coming into the country. Since liberalisation, over the past four years, the Pakistani telecom sector has attracted more than $9 billion in foreign investments. During 2007-08, the Pakistani communication sector alone received $1.62 billion in Foreign Direct Investment (FDI) – about 30% of the country’s total foreign direct investment.
Present growth of state-of-the-art infrastructures in the telecoms sector during the last four years has been the result of the PTA's vision and implementation of the deregulation policy. Paging and mobile (cellular) telephones were adopted early and freely. Cellular phones and the Internet were adopted through a rather laissez-faire
policy with a proliferation of private service providers that led to the fast adoption. With a rapid increase in the number of Internet users and ISP
s, and a large English-speaking population, Pakistani society has seen an unparalleled revolution in communications.
According to the PC World, a total of 6.37 billion text messages were sent through Acision messaging systems across Asia Pacific over the 2008/2009 Christmas and New Year period. Pakistan was amongst the top five ranker with one of the highest SMS traffic with 763 million messages.
Pakistan is ranked 4th in terms of broadband Internet growth in the world, as the subscriber base of broadband Internet has been increasing rapidly. The rankings are released by Point Topic Global broadband analysis, a global research centre.
The Federal Bureau of Statistics
provisionally valued this sector at Rs.982,353 million in 2005 thus registering over 91% growth since 2000.
A new rail link trial has been established from Islamabad-Pakistan via Teharan-Iran Via Istanbul-Turkey .Furthermore it would promote trade, tourism, and would also would serve as an effective link for the exports to Europe (as Turkey part of Europe and Asia].
Pakistan International Airlines
, the flagship airline of Pakistan's civil aviation
industry, has turnover exceeding $1 billion in 2005. The government announced a new shipping policy in 2006 permitting banks and financial institutions to mortgage ships.
Private sector airlines in Pakistan include Airblue
, which serves the main cities within Pakistan in addition to destinations in the Gulf and Manchester
in the United Kingdom
. The other private carrier is Shaheen Air International whose network covers the main cities of Pakistan and the Gulf.
provisionally valued this sector at Rs.1,358,309 million in 2005 thus registering over 96% growth since 2000.
Pakistan has been ranked 34 out of 52 countries in the World Economic Forum's first Financial Development Report, which was released in Pakistan through the Competitiveness Support Fund (CSF) in December, 2008. Under Factors, Policies and Institutions pillar, Pakistan ranks 49th in institutional environment, 50th in business environment and 37th in Financial Stability. In the Financial Intermediation Pillar Pakistan ranks 25th in banks, 42nd in non banks and 17th in Financial Markets. Under Capital Availability and Access, Pakistan ranks 33rd.
Pakistan's banking sector has remained remarkably strong and resilient during the world financial crisis in 2008–09, a feature which has served to attract a substantial amount of FDI in the sector. Stress tests conducted on June 2008 data indicate that the large banks are relatively robust, with the medium and small-sized banks positioning themselves in niche markets. Banking sector turned profitable in 2002. Their profits continued to rise for the next five years and peaked to Rs 84.1 ($1.1 billion) billion in 2006.
The credit card market continued its strong growth with sales crossing the 1 million mark in mid-2005. Since 2000 Pakistani banks have begun aggressive marketing of consumer finance to the emerging middle class, allowing for a consumption boom (more than a 7-month waiting list for certain car models) as well as a construction bonanza.
The Federal Bureau of Statistics
provisionally valued this sector at Rs.311,741 million in 2005 thus registering over 166% growth since 2000.
The Federal Bureau of Statistics
provisionally valued this sector at Rs.185,376 million in 2005 thus registering over 49% growth since 2000.
While the government claims credit for overseeing a turnaround in the economy through a comprehensive recovery, it has just failed to oversee a similar improvement in the quality of the network for electricity supply.
Some officials even go as far as claiming that the frequent power cuts across Pakistan today are indicative of an emerging prosperity as there is fast-rising demand for electricity. And yet, the failure to meet the demand is indeed indicative of a challenge to that very prosperity. This is despite Pakistan having tremendous potential to generate wind power. Apart from this, most cities in Pakistan receive substantial sunlight throughout the year, which would suggest good conditions for investment in solar energy. If the rich people in Pakistan are shifted to solar Engery that they should be forced to purchase solar panels, the shortfall can be controlled. this will make the economy boos again as before 2007.
Recently, the Minister for Water and Power, Raja Pervez Ashraf, has claimed that load-shedding will end by December 2009 through employing rental power generation units and that the country will be self-sufficient by the year 2011. Critics argue that this is overly optimistic.
Power cuts continue by 30 june 2011, despite the minister's hollow claims.
(FDI) in Pakistan soared by 180.6 per cent year-on-year to US$2.22 billion and portfolio investment by 276 per cent to $407.4 million during the first nine months of fiscal year 2006, the State Bank of Pakistan
(SBP) reported on April 24. During July–March 2005-06, FDI year-on-year increased to $2.224 billion from only $792.6 million and portfolio investment to $407.4 million, whereas it was $108.1 million in the corresponding period last year, according to the latest statistics released by the State Bank.
Pakistan has achieved FDI of almost $8.4 billion in the financial year 06/07, surpassing the government target of $4 billion. Foreign investment had significantly declined by 2010, dropping by 54.6% due to Pakistan's political instability and weak law and order, according to the Bank of Pakistan.
Pakistan is now the most investment-friendly nation in South Asia. Business regulations have been profoundly overhauled along liberal lines, especially since 1999. Most barriers to the flow of capital and international direct investment have been removed. Foreign investors do not face any restrictions on the inflow of capital, and investment of up to 100% of equity participation is allowed in most sectors. Unlimited remittance of profits, dividends, service fees or capital is now the rule. Business regulations are now among the most liberal in the region. This was confirmed by the World Bank
's Ease of Doing Business Index
report published in September 2009 ranking Pakistan (at 85th) well ahead of neighbours like China (at 89th) and India (at 133rd).
Pakistan is attracting an increasingly large amount of private equity and was the ranked as number 20 in the world based on the amount of private equity entering the nation. Pakistan has been able to attract a large portion of the global private equity investments because of economic reforms initiated in 2003 that have provided foreign investors with greater assurances for the stability of the nation and their ability to repatriate invested funds in the future.
Tariffs have been reduced to an average rate of 16%, with a maximum of 25% (except for the car industry). The privatisation process, which started in the early 1990s, has gained momentum, with most of the banking system privately owned, and the oil sector targeted to be the next big privatisation operation.
The recent improvements in the economy and the business environment have been recognised by international rating agencies such as Moody’s and Standard and Poor’s (country risk upgrade at the end of 2003).
The foreign exchange receipts from these sales are also helping cover the current account deficit.
Pakistan is a member of the World Trade Organization
, and has bilateral and multilateral trade agreements with many nations and international organizations.
Fluctuating world demand for its exports, domestic political uncertainty, and the impact of occasional droughts on its agricultural production have all contributed to variability in Pakistan's trade deficit.
In the six months to December 2003, Pakistan recorded a current account surplus of $1.761 billion, roughly 5% of GDP. Pakistan's exports continue to be dominated by cotton textiles and apparel, despite government diversification efforts. Exports grew by 19.1% in FY 2002-03. Major imports include petroleum and petroleum products, edible oil, chemicals, fertilizer, capital goods, industrial raw materials, and consumer products.
Past external imbalances left Pakistan with a large foreign debt burden. Principal and interest payments in FY 1998-99 totaled $2.6 billion, more than double the amount paid in FY 1989-90. Annual debt service peaked at over 34% of export earnings before declining.
With a current account surplus in recent years, Pakistan's hard currency reserves have grown rapidly. Improved fiscal management, greater transparency and other governance reforms have led to upgrades in Pakistan's credit rating. Together with lower global interest rates, these factors have enabled Pakistan to prepay, refinance and reschedule its debts to its advantage. Despite the country's current account surplus and increased exports in recent years, Pakistan still has a large merchandise-trade deficit. The budget deficit in fiscal year 1996-97 was 6.4% of GDP. The budget deficit in fiscal year 2003-04 is expected to be around 4% of GDP.
In the late 1990s Pakistan received about $2.5 billion per year in loan/grant assistance from international financial institutions (e.g., the IMF, the World Bank, and the Asian Development Bank
) and bilateral donors. Increasingly, the composition of assistance to Pakistan shifted away from grants toward loans repayable in foreign exchange. All new U.S. economic assistance to Pakistan was suspended after October 1990, and additional sanctions were imposed after Pakistan's May 1998 nuclear weapons tests. The sanctions were lifted by president George W. Bush after Pakistani president Musharraf allied Pakistan with the U.S. in its war on terror. Having improved its finances, the government refused further IMF assistance, and consequently the IMF program was ended. The government is also reducing tariff barriers with bilateral and multilateral agreements.
While the country has a current account surplus and both imports and exports have grown rapidly in recent years, it still has a large merchandise-trade deficit. This deficit amounted to over 15 billion in 2010. The budget deficit in fiscal year 2004-2005 was 3.4% of GDP. The budget deficit in fiscal year 2005-06 is expected to be over 4% of GDP. Economists believe that the soaring trade deficit would have an adverse impact on Pakistani rupee by depreciating its value against dollar (1 US $ = 60 Rupees (March 2006) ) and other currencies.
One of the main reasons that contributed to the increase in trade deficit is the increased imports of earthquake relief related items, especially tents, tarpaulin and plastic sheets to provide temporary shelter to the survivors of earthquake of October 8, 2005 in Azad Jammu and Kashmir and parts of Khyber-Pakhtunkhwa, an official said. The rise in the trade gap was also fuelled by high oil import prices, food items, machinery and automobiles.
The Petroleum Ministry says that this year the bill of oil imports was expected to reach $6.5 billion against $4.6 billion in the last fiscal year, which is the main reason behind the all-time high trade deficit.
The EU is the single largest trading partner of Pakistan absorbing over one-third of the exports in 2003. In 2010, the EU accounted for 12.4% of Pakistani imports and 22.6% of its exports.
Pakistan exports rice
, kinnow
s, mangoes, furniture
, cotton fiber, cement
, tile
s, marble
, textile
s, clothing
, leather
goods, sports goods (renowned for footballs/soccer balls), Cutlery
, surgical instruments, electrical appliance
s, software, carpet
s, rugs
, ice cream, livestock meat, chicken
, powdered milk
, wheat
, seafood
(especially shrimp/prawns), vegetables, processed food items, Pakistani-assembled Suzuki
s (to Afghanistan and other countries), defense
equipment (submarines, tanks, radars), salt
, onyx
, engineering
goods, and many other items. Pakistan produces and exports cements to Asia and the Middle East
. In August 2007, Pakistan started exporting cement
to India to fill in the shortage there caused by the building boom. Russia is a growing market for Pakistani exporters. In 2009/2010 the export target of Pakistan was US $20 billion.
As of April 2011,Pakistans exports stand at US $25 billion.
The combined deficit in services and goods stand at $17.653 billion which is approx 83.5% of country's total export of $21.136 (Goods and services). The rise in the trade gap has been attributed to high oil import bill, and rise in the prices of food items, machinery and automobiles.
Current account deficit - Current account deficit for 2006-7 reached $7.016 billion up by 41% over previous year's $4.490 billion.
Since the beginning of 2008, Pakistan's economic outlook has taken a dramatic downturn. Security concerns stemming from the nation's role in the War on Terror
have created great instability and led to a decline in FDI from a height of approximately $8 bn to $3.5bn for the current fiscal year. Concurrently, the insurgency has forced massive capital flight from Pakistan to the Gulf. Combined with high global commodity prices, the dual impact has shocked Pakistan's economy, with gaping trade deficits, high inflation and a crash in the value of the Rupee, which has fallen from 60-1 USD to over 80-1 USD in a few months. For the first time in years, it may have to seek external funding as Balance of Payments support. Consequently, S&P lowered Pakistan’s foreign currency debt rating to CCC-plus from B, just several notches above a level that would indicate default. Pakistan’s local currency debt rating was lowered to B-minus from BB-minus. Credit agency Moody’s Investors Service cut its outlook on Pakistan’s debt to negative from stable due to political uncertainty, though it maintained the country’s rating at B2.The cost of protection against a default in Pakistan’s sovereign debt trades at 1,800 basis points, according to its five year credit default swap, a level that indicates investors believe the country is already in or will soon be in default.
The middle term however may be less turbulent, depending on the political environment. The EIU hsd estimated that inflation should drop back to single digits in 2010, and that growth would pick up to over 5% per annum by 2011. However, the unprecedented floods of 2010 which encapsulated 20% of Pakistan's land area, have caused a monetary damage estimated to be in excess of $10bn, as a result of which real growth is almost flat and EIU's original targets will have to be revised. Much like previous natural disasters which have afflicted Pakistan, the floods of 2010 inflicted damage of epic proportions. However, the philanthropic nature of Pakistani people and widespread coverage by a fiercely independent and established media has proven yet again that Pakistan is an incredibly resilient nation.
(IMF), World Bank
(WB), Asian Development Bank
(ADB), etc. provides long term loans to Pakistan. Pakistan also receives bilateral aid from developed and oil-rich countries.
The Asian Development Bank
will provide close to $6 billion development assistance to Pakistan during 2006-9. The World Bank
unveiled a lending program of up to $6.5 billion for Pakistan under a new four-year, 2006–2009, aid strategy showing a significant increase in funding aimed largely at beefing up the country's infrastructure. Japan
will provide $500 million annual economic aid to Pakistan. In November 2008, the International Monetary Fund (IMF) has approved a loan of 7.6 Billion to Pakistan, to help stabilize and rebuild the country's economy.
More recently the government of Pakistan received an economic aid of US $5bn dollars out of which the US pledge of $1bn was described as a down-payment on the previously announced $1.5bn already promised to Pakistan for each of the next five years. The European Union promised $640m over four years, while reports said Saudi Arabia had pledged $700m over two years. Overall Friends of Pakistan had pledged $1.6 billion in aid, which would help Pakistan move forward on its way to self-reliance.
The 7 million strong Pakistani diaspora
, contributed US$11.2 billion to the economy in FY2011. The major source countries of remittances to Pakistan include UAE, USA, Saudi Arabia, GCC countries (including Bahrain, Kuwait, Qatar and Oman), Australia, Canada, Japan, UK and EU countries like Norway, Switzerland, etc. .
The State Bank of Pakistan (SBP) has announced that remittances sent home by overseas Pakistani workers have crossed the $10 billion mark for the first time in the country’s history as the figure reached $10.1 billion in 11 months (July-May) of the current financial year.
The 11-month figure was $2.07 billion or 25 per cent more than $8.09 billion worth of remittances received in the same period of the previous year.
In May, overseas workers remitted over $1 billion, which was the third consecutive month that remittances crossed this mark. The country received $1.05 billion, $1.03 billion and $1.05 billion in March, April and May respectively.
Citing reasons for the sharp increase in remittances, analysts say that a crackdown on the illegal Hundi and Hawala money transfer systems, swift processing and transfer of money by the banking channel and incentives for overseas Pakistanis have encouraged them to utilise legal channels. The flow of charity money after last summer floods has also given a boost to the remittances this year, they say.
In the July-May period, remittances from Saudi Arabia, UAE, USA, GCC countries (including Bahrain, Kuwait, Qatar and Oman), UK and EU countries were $2.38 billion, $2.33 billion, $1.86 billion, $1.18 billion, $1.09 billion and $320.93 million respectively. In comparison, remittances stood at $1.72 billion, $1.84 billion, $1.61 billion, $1.13 billion, $793.91 million and $229.74 million respectively in July-May 2009-10.
Remittances received from Norway, Switzerland, Australia, Canada, Japan and other countries during the 11 months amounted to $926.86 million against $740.96 million in the same period last year..
Pakistan has sustained immense socio-economic costs of being a partner in the international counter terrorism campaign. According to government estimates, the war on terror cost the Pakistani economy nearly US$8 billion a year in terms of lost exports, foreign investment, privatization, industrial output, tax collection (see table below for the government's estimation of the cost of ‘War on Terror’ to Pakistan as published in an IMF report).
{| class="wikitable"
|-
! (Rs billion) !! 2004/05 !! 2005/06 !! 2006/07 !! 2007/08 !! 2008/09
|-
| Direct Cost || 67.103 || 78.060 || 82.499 || 108.527 || 114.033
|-
| Indirect Cost* || 192.000 || 222.720 || 278.400 || 375.840 || 563.760
|-
| Total || 259.103 || 300.780 || 360.899 || 484.367 || 677.793
|}
'*On account of loss of exports, foreign investment, privatization, industrial output, tax collection, etc.
According to the IMF, the anti-terrorist campaign following the 9/11 attacks in the United States strained Pakistan’s budget, as allocations for law enforcement agencies had to be increased significantly, eroding resources for development in the country. In addition to human sufferings and resettlement costs, development projects are afflicted with delays which ultimately resulted in large cost over-runs. The heightened sense of uncertainty has contributed to capital flight and slowed down domestic economic activity, creating unease among foreign investors. There has also been massive unemployment in the terror-inflicted regions, as frequent bombings and worsening law and order situation have taken a toll on the socio-economic fabric of the country.
sovereign bond worth $750 million on March 23, 2006 that analysts said should ensure a favorable reception in the bond market. The 10-year tranche would be $50000 million and the 30-year portion $250 million. Pricing is expected during New York trading hours on March 23, 2006. The sources said that the 10-year tranche was expected to be priced at around 100125%, while the longer-dated tranche was expected to be sold at around 70.875%, the top end of the indicative yield range of 3.75 to 10.875%.
The bonds, consisting of 10-year and 30-year tranches, had generated $1.5 billion in orders and a total size of as much as $1.25 billion had been anticipated for what is Pakistan’s third foray into the international debt market since 2004.
Government of Pakistan has been raising money from the international debt market from time to time.
Details of amount raised in various issues is as follows:
1999 - $6230 million
2004 - $5000 million @ 6.75%
2005 - $6000 million worth Islamic bonds
2007 - $ 7500 million @ 6.875% worth Euro Bonds which were highly over subscribed
Other
Purchasing power parity
In economics, purchasing power parity is a condition between countries where an amount of money has the same purchasing power in different countries. The prices of the goods between the countries would only reflect the exchange rates...
(PPP). Pakistan
Pakistan
Pakistan , officially the Islamic Republic of Pakistan is a sovereign state in South Asia. It has a coastline along the Arabian Sea and the Gulf of Oman in the south and is bordered by Afghanistan and Iran in the west, India in the east and China in the far northeast. In the north, Tajikistan...
has a semi-industrialized economy, which mainly encompasses textiles, chemicals, food processing
Food processing
Food processing is the set of methods and techniques used to transform raw ingredients into food or to transform food into other forms for consumption by humans or animals either in the home or by the food processing industry...
, agriculture
Agriculture
Agriculture is the cultivation of animals, plants, fungi and other life forms for food, fiber, and other products used to sustain life. Agriculture was the key implement in the rise of sedentary human civilization, whereby farming of domesticated species created food surpluses that nurtured the...
and other industries. Growth poles of Pakistan's economy are situated along the Indus River
Indus River
The Indus River is a major river which flows through Pakistan. It also has courses through China and India.Originating in the Tibetan plateau of western China in the vicinity of Lake Mansarovar in Tibet Autonomous Region, the river runs a course through the Ladakh district of Jammu and Kashmir and...
; diversified economies of Karachi
Economy of Karachi
Karachi is referred as the financial capital of Pakistan; it accounts for a lion's share of Pakistan's revenue generation. It generates approximately 53.38% of the total collections of the Federal Board of Revenue, out of which 53.33% are customs duty and sales tax on imports. Karachi produces...
and Punjab
Economy of Punjab, Pakistan
The economy of Punjab, Pakistan is one that is largely based on agriculture and industry. Punjab is the largest province of Pakistan in terms of population, and also has the largest economy in the country compared to other provinces and administrative units. Punjab's economy has quadrupled since...
's urban centers coexist with lesser developed areas in other parts of the country. 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
India
India , officially the Republic of India , is a country in South Asia. It is the seventh-largest country by geographical area, the second-most populous country with over 1.2 billion people, and the most populous democracy in the world...
. However, IMF-approved government policies, bolstered by foreign investment and renewed access to global markets, have generated solid macroeconomic recovery the last decade. Substantial macroeconomic reforms since 2000, most notably at privatizing the banking sector have helped the economy.
GDP growth, spurred by gains in the industrial and service sectors, remained in the 6-8% range in 2004-06 due to economic reforms in the year 2000 by the Musharraf government. In 2005, the World Bank
World Bank
The World Bank is an international financial institution that provides loans to developing countries for capital programmes.The World Bank's official goal is the reduction of poverty...
named Pakistan the top reformer in its region and in the top 10 reformers globally. Islamabad
Islamabad
Islamabad is the capital of Pakistan and the tenth largest city in the country. Located within the Islamabad Capital Territory , the population of the city has grown from 100,000 in 1951 to 1.7 million in 2011...
has steadily raised development spending in recent years, including a 52% real increase in the budget allocation for development in FY07, a necessary step toward reversing the broad underdevelopment of its social sector. The fiscal deficit - the result of chronically low tax collection and increased spending, including reconstruction costs from the devastating Kashmir earthquake
2005 Kashmir earthquake
The 2005 Kashmir earthquake was a major earthquake centered in Pakistan-administered Kashmir known as Azad Kashmir, near the city of Muzaffarabad, affecting Gilgit-Baltistan and Khyber Pakhtunkhwa province of Pakistan. It occurred at 08:52:37 Pakistan Standard Time on 8 October 2005...
in 2005 was manageable.
Inflation
Inflation
In economics, inflation is a rise in the general level of prices of goods and services in an economy over a period of time.When the general price level rises, each unit of currency buys fewer goods and services. Consequently, inflation also reflects an erosion in the purchasing power of money – a...
remains the biggest threat to the economy, jumping to more than 9% in 2005 before easing to 7.9% in 2006. In 2008, following the surge in global petrol prices inflation in Pakistan reached as high as 25.0%. The central bank is pursuing tighter monetary policy while trying to preserve growth. Foreign exchange
Foreign exchange reserves
Foreign-exchange reserves in a strict sense are 'only' the foreign currency deposits and bonds held by central banks and monetary authorities. However, the term in popular usage commonly includes foreign exchange and gold, Special Drawing Rights and International Monetary Fund reserve positions...
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.
First five decades
When it gained independence in 1947 from UK. Pakistan's average economic growthEconomic growth
In economics, economic growth is defined as the increasing capacity of the economy to satisfy the wants of goods and services of the members of society. Economic growth is enabled by increases in productivity, which lowers the inputs for a given amount of output. Lowered costs increase demand...
rate since independence has been higher than the average growth rate of the world economy during the period. Average annual real GDP growth rates were 6.8% in the 1960s, 4.8% in the 1970s, and 6.5% in the 1980s. Average annual growth fell to 4.6% in the 1990s with significantly lower growth in the second half of that decade. See also
During the 1960s, Pakistan was seen as a model of economic development around the world, and there was much praise for its economic progression. Karachi was seen as an economic role model around the world, and there was much praise for the way its economy was progressing. Many countries sought to emulate Pakistan's economic planning strategy and one of them, South Korea
South Korea
The Republic of Korea , , is a sovereign state in East Asia, located on the southern portion of the Korean Peninsula. It is neighbored by the People's Republic of China to the west, Japan to the east, North Korea to the north, and the East China Sea and Republic of China to the south...
, copied the city's second "Five-Year Plan" and World Financial Center in Seoul is designed and modeled after Karachi. Later, economic mismanagement in general, and fiscally imprudent economic policies in particular, caused a large increase in the country's public debt and led to slower growth in the 1970s and 1990s.The economy recovered during the 1980s via a policy of deregulation, as well as an increased inflow of foreign aid and remittances from expatriate workers.
Recent decades
This is a chart of trend of gross domestic product of Pakistan at market prices estimated by the International Monetary Fund with figures in millions of Pakistani Rupees. See also{| class="wikitable"
|-
! Year || Gross Domestic Product || US Dollar Exchange || Inflation Index
(2000=100) || Per Capita Income
(as % of USA)
|-
| 1960 || 20,058 || 4.76 Pakistani Rupees || || 3.37
|-
| 1965 || 31,740 || 4.76 Pakistani Rupees || || 3.40
|-
| 1970 || 51,355 || 4.76 Pakistani Rupees || || 3.26
|-
| 1975 || 131,330 || 9.91 Pakistani Rupees || || 2.36
|-
| 1978 || 283,460 || 9.97 Pakistani Rupees || 21 || 2.83
|-
| 1985 || 569,114 || 16.28 Pakistani Rupees || 30 || 2.07
|-
| 1990 || 1,029,093 || 21.41 Pakistani Rupees || 41 || 1.92
|-
| 1995 || 2,268,461 || 30.62 Pakistani Rupees || 68 || 2.16
|-
| 2000 || 3,826,111 || 51.64 Pakistani Rupees || 100 || 1.54
|-
| 2005 || 6,581,103 || 59.86 Pakistani Rupees || 126 || 1.71
|-
Economic resilience
Background
Historically, Pakistan's overall economic output (GDPGross domestic product
Gross domestic product refers to the market value of all final goods and services produced within a country in a given period. GDP per capita is often considered an indicator of a country's standard of living....
) has grown every year since a 1951 recession
Recession
In economics, a recession is a business cycle contraction, a general slowdown in economic activity. During recessions, many macroeconomic indicators vary in a similar way...
. Despite this record of sustained growth, Pakistan's economy had, until a few years ago, been characterized as unstable and highly vulnerable to external and internal shocks
Shock (economics)
In economics a shock is an unexpected or unpredictable event that affects an economy, either positively or negatively. Technically, it refers to an unpredictable change in exogenous factors—that is, factors unexplained by economics—which may have an impact on endogenous economic variables.The...
. However, the economy proved to be unexpectedly resilient in the face of multiple adverse events concentrated into a four-year (1998–2002) period —
- the Asian financial crisis;
- economic sanctionsEconomic sanctionsEconomic sanctions are domestic penalties applied by one country on another for a variety of reasons. Economic sanctions include, but are not limited to, tariffs, trade barriers, import duties, and import or export quotas...
— according to Colin PowellColin PowellColin Luther Powell is an American statesman and a retired four-star general in the United States Army. He was the 65th United States Secretary of State, serving under President George W. Bush from 2001 to 2005. He was the first African American to serve in that position. During his military...
, Pakistan was "sanctioned to the eyeballs"; - The global recessionGlobal recessionA global recession is a period of global economic slowdown. The International Monetary Fund takes many factors into account when defining a global recession, but it states that global economic growth of 3 percent or less is "equivalent to a global recession".By this measure, four periods since...
of 2001-2002; - a severe droughtDroughtA drought is an extended period of months or years when a region notes a deficiency in its water supply. Generally, this occurs when a region receives consistently below average precipitation. It can have a substantial impact on the ecosystem and agriculture of the affected region...
— the worst in Pakistan's history, lasting about four years; - heightened perceptions of risk as a result of military tensions with India — with as many as 1 million troops on the border, and predictions of impending (potentially nuclear) war;
- the post-9/11 military actionWar in Afghanistan (2001–present)The War in Afghanistan began on October 7, 2001, as the armed forces of the United States of America, the United Kingdom, Australia, and the Afghan United Front launched Operation Enduring Freedom...
in neighboring Afghanistan, with a massive influx of refugees from that country;
Despite these adverse events, Pakistan's economy kept growing, and economic growth accelerated towards the end of this period. This resilience has led to a change in perceptions of the economy, with leading international institutions such as the IMF, World Bank, and the ADB praising Pakistan's performance in the face of adversity.
More recent reports of resilience
Additional confirmation that the country's economy is not as weather-sensitive as had been previously perceived comes from a 2008 analysis that "examined 68 countries, quantifying their sensitivity to fluctuations in weather, using figures on GDP by industry sector and the sensitivity of particular sectors to given weather variables." The analysis found that of the 68 countries, the "least weather-sensitive country was Pakistan."After the highly destructive 2005 earthquake
2005 Kashmir earthquake
The 2005 Kashmir earthquake was a major earthquake centered in Pakistan-administered Kashmir known as Azad Kashmir, near the city of Muzaffarabad, affecting Gilgit-Baltistan and Khyber Pakhtunkhwa province of Pakistan. It occurred at 08:52:37 Pakistan Standard Time on 8 October 2005...
, Pakistan's economy kept expanding, growing by over 7% in the twelve months ending June 30, 2006.
Pakistan emerged as one of the best performers in the wake of the global financial crisis, even as the country waged a costly war against militants. Its domestically-driven economy was minimally affected and its banking sector boasted surplus liquidity while remaining unharmed. However the impact was seen for export sectors which shrank as a result of lower external demand. ref>
Macroeconomic reform and prospects
Government revenues have greatly improved in recent years, as a result of economic growth, tax reforms - with a broadening of the tax base, and more efficient tax collection as a result of self-assessment schemes and corruption controls in the Central Board of Revenue
Central Board of Revenue
The Federal Board of Revenue is the semi-autonomous, supreme federal agency of Pakistan that is responsible for auditing, enforcing and collecting revenue for the government of Pakistan...
- and the privatization of public utilities and telecommunications. Pakistan is aggressively cutting tariffs and assisting exports by improving ports, roads, electricity supplies and irrigation projects. Islamabad has doubled development spending from about 2% of GDP in the 1990s to 4% in 2003, a necessary step towards reversing the broad underdevelopment of its social sector.
Liberalization in the international textile trade has already yielded benefits for Pakistan's exports, and the country also expects to profit from freer trade in agriculture. As a large country, Pakistan hopes to take advantage of significant economies of scale, and to replace China as the largest textile manufacturer as the latter China moves up the value-added chain. These industries play to Pakistan's relative strengths in low labor costs.
Growing stability in the nation's monetary policies has contributed to a reduction in money-market interest rates, and a great expansion in the quantity of credit, changing consumption and investment patterns in the nation. Pakistan's domestic natural gas
Natural gas
Natural gas is a naturally occurring gas mixture consisting primarily of methane, typically with 0–20% higher hydrocarbons . It is found associated with other hydrocarbon fuel, in coal beds, as methane clathrates, and is an important fuel source and a major feedstock for fertilizers.Most natural...
production, and its significant use of CNG
Compressed natural gas
Compressed natural gas is a fossil fuel substitute for gasoline , diesel, or propane/LPG. Although its combustion does produce greenhouse gases, it is a more environmentally clean alternative to those fuels, and it is much safer than other fuels in the event of a spill...
in automobiles, has cushioned the effect of the oil-price shock
Shock (economics)
In economics a shock is an unexpected or unpredictable event that affects an economy, either positively or negatively. Technically, it refers to an unpredictable change in exogenous factors—that is, factors unexplained by economics—which may have an impact on endogenous economic variables.The...
of 2004-2005. Pakistan is also moving away from the doctrine of import substitution which some developing countries (such as Iran) dogmatically pursued in the twentieth century. The Pakistani government is now pursuing an export-driven model of economic growth successfully implemented by South East Asia and now highly successful in China
China
Chinese civilization may refer to:* China for more general discussion of the country.* Chinese culture* Greater China, the transnational community of ethnic Chinese.* History of China* Sinosphere, the area historically affected by Chinese culture...
.
In 2005, the World Bank
World Bank
The World Bank is an international financial institution that provides loans to developing countries for capital programmes.The World Bank's official goal is the reduction of poverty...
reported that
- "Pakistan was the top reformer in the region and the number 10 reformer globally — making it easier to start a business, reducing the cost to register property, increasing penalties for violating corporate governance rules, and replacing a requirement to license every shipment with two-year duration licenses for traders."
Doing Business
The World Bank (WB) and International Finance Corporation's flagship report Ease of Doing Business IndexEase of Doing Business Index
The Ease of Doing Business Index is an index created by the World Bank. Higher rankings indicate better, usually simpler, regulations for businesses and stronger protections of property rights...
2010 ranked Pakistan 85 among 181 countries around the globe. Pakistan comes highest in South Asia but also ranks higher than China, Russia and India which is at 133. The top five countries are Singapore, New Zealand, the United States, Hong Kong and United Kingdom.
The Government of Pakistan
Government of Pakistan
The Government of Pakistan is a federal parliamentary system, with an indirectly-elected President as the Head of State and Commander in Chief of the Pakistani Armed Forces, and an indirectly-elected Prime Minister as the Head of Government. The President’s appointment and term are...
has granted numerous incentives to technology companies wishing to do business in Pakistan. A combination of decade-plus tax holiday
Tax holiday
A tax holiday is a temporary reduction or elimination of a tax. Programs may be referred to as tax abatements, tax subsidies, tax holidays, or tax reduction programs. Governments usually create tax holidays as incentives for business investment...
s, zero duties
Tariff
A tariff may be either tax on imports or exports , or a list or schedule of prices for such things as rail service, bus routes, and electrical usage ....
on computer imports, government incentives for venture capital
Venture capital
Venture capital is financial capital provided to early-stage, high-potential, high risk, growth startup companies. The venture capital fund makes money by owning equity in the companies it invests in, which usually have a novel technology or business model in high technology industries, such as...
and a variety of programs for subsidizing technical education, are intended
there.
The economy today
Due to inflation and economic crisis worldwide, Pakistan's economy reached a state of Balance of Payment crisis. "The International Monetary Fund bailed out Pakistan in November 2008 to avert a balance of payments crisis and in July last year increased the loan to $11.3 billion from an initial $7.6 billion."During the mid-2000s, Pakistan experienced a period of tremendous growth, averaging 7% yearly GDP growth between 2003-07. Due to its large population of 186 million, it was included in 2005 by the Goldman Sachs Global Economics Group as one of the "Next Eleven
Next Eleven
The Next Eleven are eleven countries—Bangladesh, Egypt, Indonesia, Iran, Mexico, Nigeria, Pakistan, Philippines, South Korea, Turkey, and Vietnam — identified by Goldman Sachs investment bank and Jim O'Neill as having a high potential of becoming, along with the BRICS, the world's largest...
(N-11)" – a group of countries with economies that “might have the kind of potential for global impact that the BRICs projections highlighted, essentially an ability to match the G7 in size”.
By October 2007, Pakistan raised back its Foreign Reserves to a handsome $16.4 billion. Exceptional policies kept Pakistan's trade deficit controlled at $13 billion, exports boomed to $18 billion, revenue generation increased to become $13 billion and attracted foreign investment of $8.4 billion.
Since the beginning of 2008, Pakistan's economic outlook has taken stagnation. Security concerns stemming from the nation's role in the War on Terror
War on Terror
The War on Terror is a term commonly applied to an international military campaign led by the United States and the United Kingdom with the support of other North Atlantic Treaty Organisation as well as non-NATO countries...
have created great instability and led to a decline in FDI from a height of approximately $8 bn to $3.5bn for the current fiscal year. Concurrently, the insurgency has forced massive capital flight from Pakistan to the Gulf. Combined with high global commodity prices, the dual impact has shocked Pakistan's economy, with gaping trade deficits, high inflation and a crash in the value of the Rupee, which has fallen from 60-1 USD to over 80-1 USD in a few months. For the first time in years, it may have to seek external funding as Balance of Payments support. Consequently, S&P lowered Pakistan’s foreign currency debt rating to CCC-plus from B, just several notches above a level that would indicate default. Pakistan’s local currency debt rating was lowered to B-minus from BB-minus. Credit agency Moody’s Investors Service cut its outlook on Pakistan’s debt to negative from stable due to political uncertainty, though it maintained the country’s rating at B2.The cost of protection against a default in Pakistan’s sovereign debt trades at 1,800 basis points, according to its five year credit default swap, a level that indicates investors believe the country is already in or will soon be in default.
The middle term however may be less turbulent, depending on the political environment. The EIU estimates that inflation should drop back to single digits in 2010, and that growth should pick up to over 5% per annum by 2011. Although less than the previous 5 year average of 7%, it would represent an overcoming of the present crisis wherein growth is a mere 3.5-4%.
Economic comparison of Pakistan 1999-2008
|-
! Indicator || 1999 || 2007 || 2008 || 2009
|-
| GDP || $ 75 billion || $ 160 billion || $ 170 billion || $ 185 billion
|-
| GDP Purchasing Power Parity (PPP) || $ 270 billion || $ 475.5 billion || $ 504 billion || $ 545.6 billion
|-
| GDP per Capita Income || $ 450 || $ 925 || $1085 || $1250
|-
| Revenue collection || Rs. 305 billion || Rs. 708 billion || Rs. 990 billion || Rs. 1.05 trillion
|-
| Foreign reserves || $ 1.96 billion || $ 16.4 billion || $ 8.89 billion || $ 17.21 billion
|-
| Exports || $ 7.5 billion || $ 18.5 billion || $ 19.22 billion || $ 18.45 billion
|-
| Textile Exports || $ 5.5 billion || $ 11.2 billion || - || -
|-
| KHI stock exchange (100-Index) || $ 5 billion at 700 points || $ 75 billion at 14,000 points || $ 46 billion at 9,300 points || $ 26.5 billion at 9,000 points
|-
| Foreign Direct Investment || $ 1 billion || $ 8.4 billion || $ 5.19 billion || $ 4.6 billion
|-
| External Debt & Liabilities || $ 39 billion || $ 40.17 billion || $ 45.9 billion || $ 50.1 billion
|-
| Poverty level || 34% || 24% || - || -
|-
| Literacy rate || 45% || 53% || - || -
|-
| Development programs || Rs. 80 billion || Rs. 520 billion || Rs. 549.7 billion || Rs. 621 billion
|}
Economic Comparison 1999-2008
Stock market
In the first four years of the twenty-first century, Pakistan's KSE 100 IndexKSE 100 Index
Karachi Stock Exchange 100 Index is a stock index acting as a benchmark to compare prices on the Karachi Stock Exchange over a period of time. In determining representative compaines to compute the index on, companies with the highest market capitalization are selected...
was the best-performing stock market index
Stock market index
A stock market index is a method of measuring a section of the stock market. Many indices are cited by news or financial services firms and are used as benchmarks, to measure the performance of portfolios such as mutual funds....
in the world as declared by the international magazine “Business Week”. The stock market capitalisation of listed companies in Pakistan was valued at $5,937 million in 2005 by the World Bank
World Bank
The World Bank is an international financial institution that provides loans to developing countries for capital programmes.The World Bank's official goal is the reduction of poverty...
. But in 2008, after the General Elections, uncertain political environment, rising militancy along western borders of the country, and mounting inflation and current account deficits resulted in the steep decline of the Karachi Stock Exchange
Karachi Stock Exchange
The Karachi Stock Exchange or KSE is a stock exchange located in Karachi, Sindh, Pakistan. It is Pakistan's largest and oldest stock exchange, with many Pakistani as well as overseas listings. Currently located in Stock Exchange Building on Stock Exchange Road, in the heart of Karachi's Business...
. As a result, the corporate sector
Pakistan Inc
Pakistan Inc. is a common term used by the Pakistani media to refer to the corporate sector of the nation.The Companies Ordinance 1984 allows a variety of formations in the mixed economy of Pakistan....
of Pakistan has declined dramatically in recent times.
However the market bounced back strongly in 2009 and the trend continues in 2011.
Manufacturing and finance
Pakistan's manufacturing sector has experienced double-digit growth in recent years, from 2000 to 2007, with large-scale manufacturing growing from a minimal 1.5% in 1999 to a record 19.9% in 2004-05 and averaged 8.8% by end of 2007.The Federal Bureau of Statistics valued the finance and insurance sector at Rs.311,741 million in 2005 thus registering over 166% growth since 2000. A reduction in the fiscal deficit had resulted in less government borrowing in the domestic money market, lower interest rates, and an expansion in private sector lending to businesses and consumers.
Middle class
As of 2011, according to the Time MagazineTime (magazine)
Time is an American news magazine. A European edition is published from London. Time Europe covers the Middle East, Africa and, since 2003, Latin America. An Asian edition is based in Hong Kong...
, the size of the Pakistani middle class, under prevailing economic conditions is estimated at 20 million, out of a population of 180 million. Representing 11% of the population of the country.
On measures of income inequality
Income inequality metrics
The concept of inequality is distinct from that of poverty and fairness. Income inequality metrics or income distribution metrics are used by social scientists to measure the distribution of income, and economic inequality among the participants in a particular economy, such as that of a specific...
, the country ranks slightly better than the median. In late 2006, the Central Board of Revenue
Central Board of Revenue
The Federal Board of Revenue is the semi-autonomous, supreme federal agency of Pakistan that is responsible for auditing, enforcing and collecting revenue for the government of Pakistan...
estimated that there were almost 2.8 million income-tax payers in the country.
Poverty levels have decreased by 10% since 2001 Foreign Companies which provide for Pakistani middle classes have been very successful. For example, demand for Uniliver products have recently been so high that even after doubling production the Anglo-Dutch company struggled to meet demand and it's Chairman stated "Pakistanis can’t seem to have enough".
Poverty alleviation expenditures
Demographics
With a per capita GDPGross domestic product
Gross domestic product refers to the market value of all final goods and services produced within a country in a given period. GDP per capita is often considered an indicator of a country's standard of living....
of over $3000 (PPP
Purchasing power parity
In economics, purchasing power parity is a condition between countries where an amount of money has the same purchasing power in different countries. The prices of the goods between the countries would only reflect the exchange rates...
, 2006) compared with $2600 (PPP
Purchasing power parity
In economics, purchasing power parity is a condition between countries where an amount of money has the same purchasing power in different countries. The prices of the goods between the countries would only reflect the exchange rates...
, 2005) in 2005 the World Bank considers Pakistan a medium-income country, it is also recorded as a "Medium Development Country" on the Human Development Index
Human Development Index
The Human Development Index is a composite statistic used to rank countries by level of "human development" and separate "very high human development", "high human development", "medium human development", and "low human development" countries...
2007. Pakistan has a large informal economy, which the government is trying to document and assess. Approximately 56% of adults are literate, and life expectancy is about 64 years. The population, about 168 million in 2007, is growing at about 1.80%.
Relatively few resources in the past had been devoted to socio-economic development or infrastructure projects. Inadequate provision of social services, high birth rates and immigration from nearby countries in the past have contributed to a persistence of poverty. An influential recent study concluded that the fertility rate peaked in the 1980s, and has since fallen sharply. Pakistan has a family-income Gini index of 41, close to the world average of 39.
Employment
The high population growth in the past few decades has ensured that a very large number of young people are now entering the labor market. Even though it is among the seven most populous Asian nations, Pakistan has a lower population density than Bangladesh, Japan, India, and the Philippines. In the past, excessive red tape made firing from jobs, and consequently hiring, difficult. Significant progress in taxation and business reforms has ensured that many firms now are not compelled to operate in the underground economy.In late 2006, the government launched an ambitious nationwide service employment scheme aimed at disbursing almost $2 billion over five years.
Mean wages were $0.98 per manhour in 2009.Rate of unemployment is 25%.
High inflation
Inflation
In economics, inflation is a rise in the general level of prices of goods and services in an economy over a period of time.When the general price level rises, each unit of currency buys fewer goods and services. Consequently, inflation also reflects an erosion in the purchasing power of money – a...
and limited wage growth have drawn more women into the workforce to feed their families, in spite of cultural resistance and domestic abuse over the issue.
Tourism
Tourism in PakistanTourism in Pakistan
Tourism in Pakistan has been stated as being the tourism industry's "next big thing". Pakistan with its diverse cultures, people and landscapes has attracted 0.7 million tourists to the country, almost double to that of a decade ago....
is a growing industry. Major attractions include ruins of Indus valley civilization and mountain resorts in the Himalayas
Himalayas
The Himalaya Range or Himalaya Mountains Sanskrit: Devanagari: हिमालय, literally "abode of snow"), usually called the Himalayas or Himalaya for short, is a mountain range in Asia, separating the Indian subcontinent from the Tibetan Plateau...
. Himalayan and Karakoram
Karakoram
The Karakoram, or Karakorum , is a large mountain range spanning the borders between Pakistan, India and China, located in the regions of Gilgit-Baltistan , Ladakh , and Xinjiang region,...
range (which includes K2
K2
K2 is the second-highest mountain on Earth, after Mount Everest...
, the second highest mountain peak in the world, attracts adventurers and mountaineers from around the world. Karachi and Lahore are major attractions for authentic Pakistani food and culture.
Revenue
Although the country is a Federation with constitutional division of taxation powers between the Federal Government and the four provinces, the revenue department of the Federal Government, the Federal board of Revenue, collects almost 95% of the entire national revenue.The Federal Board of Revenue collected nearly one trillion rupees ($14.1 billion) in taxes in the 2007-2008 financial year, while it collected about 1558 billion ($18.3 billion) during FY 2010-2011. The revenue collection has hovered below 10% of the GDP for the past several years. The Federal Board of Revenue mainly relies on indirect taxation, and most of the Income Tax is also collected indirectly, in the form of withholding taxes.
Currency system
Rupee
The basic unit of currency is the RupeePakistani rupee
The rupee is the currency of Pakistan. The issuance of the currency is controlled by the State Bank of Pakistan, the central bank of the country. The most commonly used symbol for the rupee is Rs, used on receipts when purchasing goods and services. In Pakistan, the rupee is referred to as the...
, ISO code PKR and abbreviated Rs, which is divided into 100 paisas. Currently the newly printed 5,000 rupee note is the largest denomination in circulation. Recently the SBP has introduced all new design notes of Rs. 5, 10, 20, 50, 100, 500, 1000, and 5000 denomination, while the design work of Rs.10,000 note is in progress which will help the banking industry in keeping few notes in saving accounts. The new notes have been designed using the euro technology and are made in eye-catching bright colours and bold, stylish designs.
Pound sterling
The pound sterling , commonly called the pound, is the official currency of the United Kingdom, its Crown Dependencies and the British Overseas Territories of South Georgia and the South Sandwich Islands, British Antarctic Territory and Tristan da Cunha. It is subdivided into 100 pence...
until 1982, when the government of General Zia-ul-Haq, changed it to managed float. As a result, the rupee devalued by 38.5% between 1982/83 many of the industries built by his predecessor suffered with a huge surge in import costs. After years of appreciation under Zulficar Ali Bhutto and despite huge increases in foreign aid the Rupee depreciated.
Foreign exchange rate
- 1 Pakistani Rupee (PKR) = 100 Paisa
The Pakistani rupee depreciated against the US dollar until the turn of the century, when Pakistan's large current-account surplus pushed the value of the rupee up versus the dollar. Pakistan's central bank then stabilized by lowering interest rates and buying dollars, in order to preserve the country's export competitiveness
- Exchange rates: Pakistani rupeePakistani rupeeThe rupee is the currency of Pakistan. The issuance of the currency is controlled by the State Bank of Pakistan, the central bank of the country. The most commonly used symbol for the rupee is Rs, used on receipts when purchasing goods and services. In Pakistan, the rupee is referred to as the...
(PKR) per US$1
{| class="wikitable" style="float:right;margin-left:2ex"
|+PKR per US dollar 1995-2008
! style="background:#ececec;" rowspan="2"|Year
!rowspan=16|
!colspan=2 style="background:#ececec; line-height: 1.1em"|Highest ↑
!rowspan=16|
!colspan=2 style="background:#ececec; line-height: 1.1em"|Lowest ↓
|-
! style="background:#ececec; line-height:1.1em;"|Date
! style="background:#ececec; line-height:1.1em;"|Rate
! style="background:#ececec; line-height:1.1em;"|Date
! style="background:#ececec; line-height:1.1em;"|Rate
|-
!1995
|
|style="background:yellow"|PKR 30.930
|
|
|-
!1996
|
|
|
|PKR 35.266
|-
!1997
|
|PKR 40.185
|
|
|-
!1998
|
|PKR 44.550
|
|
|-
!1999
|
|PKR 51.90
|
|
|-
!2000
|
|PKR 53.6482
|
|
|-
!2001
|
|PKR 61.9272
|
|
|-
!2002
|
|PKR 59.7238
|
|
|-
!2003
|
|PKR 57.752
|
|
|-
!2004
|
|PKR 58.000
|
|
|-
!2007
|Aug 05
|PKR 60.75
|Nov 01
|PKR 60.50
|-
!2008
|October 10
|style="background:yellow"|PKR 80.00
|Apr 01
|PKR 63.50
|-
|colspan="7" style="font-size:90%; line-height: 1em; background:#F2F2F2"|Source: PKR exchange rates in USD, SBP
State Bank of Pakistan
The State Bank of Pakistan is the central bank of Pakistan. While its constitution, as originally laid down in the State Bank of Pakistan Order 1948, remained basically unchanged until January 1, 1974, when the bank was nationalized, the scope of its functions was considerably enlarged...
|}
Foreign exchange reserves
By October 2007, at the end of Prime Minister Shaukat Aziz’s tenure, Pakistan raised back its Foreign Reserves to $16.4 billion. Pakistan's trade deficit was at $13 billion, exports grew to $18 billion, revenue generation increased to become $13 billion and the country attracted foreign investment of $8.4 billion.On October 11, 2008 State Bank of Pakistan
State Bank of Pakistan
The State Bank of Pakistan is the central bank of Pakistan. While its constitution, as originally laid down in the State Bank of Pakistan Order 1948, remained basically unchanged until January 1, 1974, when the bank was nationalized, the scope of its functions was considerably enlarged...
reported that country's foreign exchange reserves had gone down by $571.9 Million to $7749.7 Million. The foreign exchange reserves had declined more by $10 billion to an alarming rate of $6.59 billion. In September 2010 According the State Bank Of Pakistan Pakistan's Foreign Reserves Stood at $16.99 Billion.
Structure of economy
The economy of the Islamic Republic of Pakistan is suffering with high inflation rates well above 26%.Over 1,081 patent applications were filed by non-resident Pakistanis in 2004 revealing a new-found confidence.
Agriculture accounted for about 53% of GDP in 1947. While per-capita agricultural output has grown since then, it has been outpaced by the growth of the non-agricultural sectors, and the share of agriculture has dropped to roughly one-fifth of Pakistan's economy.
In recent years, the country has seen rapid growth in industries (such as apparel, textiles, and cement) and services (such as telecommunications, transportation, advertising, and finance).
Agriculture
Food and Agriculture Organization
The Food and Agriculture Organization of the United Nations is a specialised agency of the United Nations that leads international efforts to defeat hunger. Serving both developed and developing countries, FAO acts as a neutral forum where all nations meet as equals to negotiate agreements and...
of The United Nations, given here with the 2008 ranking:
- ApricotApricotThe apricot, Prunus armeniaca, is a species of Prunus, classified with the plum in the subgenus Prunus. The native range is somewhat uncertain due to its extensive prehistoric cultivation.- Description :...
(3rd) - Buffalo MilkMilkMilk is a white liquid produced by the mammary glands of mammals. It is the primary source of nutrition for young mammals before they are able to digest other types of food. Early-lactation milk contains colostrum, which carries the mother's antibodies to the baby and can reduce the risk of many...
(2nd) - ChickpeaChickpeaThe chickpea is a legume of the family Fabaceae, subfamily Faboideae...
(3rd) - CottonCottonCotton is a soft, fluffy staple fiber that grows in a boll, or protective capsule, around the seeds of cotton plants of the genus Gossypium. The fiber is almost pure cellulose. The botanical purpose of cotton fiber is to aid in seed dispersal....
, lint (4th) - CottonCottonCotton is a soft, fluffy staple fiber that grows in a boll, or protective capsule, around the seeds of cotton plants of the genus Gossypium. The fiber is almost pure cellulose. The botanical purpose of cotton fiber is to aid in seed dispersal....
, Seed (3rd) - Dates (5th)
- MangoMangoThe mango is a fleshy stone fruit belonging to the genus Mangifera, consisting of numerous tropical fruiting trees in the flowering plant family Anacardiaceae. The mango is native to India from where it spread all over the world. It is also the most cultivated fruit of the tropical world. While...
(6th) - OnionOnionThe onion , also known as the bulb onion, common onion and garden onion, is the most widely cultivated species of the genus Allium. The genus Allium also contains a number of other species variously referred to as onions and cultivated for food, such as the Japanese bunching onion The onion...
, dry (4th) - OrangesOrange (fruit)An orange—specifically, the sweet orange—is the citrus Citrus × sinensis and its fruit. It is the most commonly grown tree fruit in the world....
(11th) - RiceRiceRice is the seed of the monocot plants Oryza sativa or Oryza glaberrima . As a cereal grain, it is the most important staple food for a large part of the world's human population, especially in East Asia, Southeast Asia, South Asia, the Middle East, and the West Indies...
,paddy (11th) - SugarcaneSugarcaneSugarcane refers to any of six to 37 species of tall perennial grasses of the genus Saccharum . Native to the warm temperate to tropical regions of South Asia, they have stout, jointed, fibrous stalks that are rich in sugar, and measure two to six metres tall...
(5th) - Tangerines, mandarin orangeMandarin orangeThe orange, also known as the ' or mandarine , is a small citrus tree with fruit resembling other oranges. Mandarin oranges are usually eaten plain or in fruit salads...
, clementine (9th) - WheatWheatWheat is a cereal grain, originally from the Levant region of the Near East, but now cultivated worldwide. In 2007 world production of wheat was 607 million tons, making it the third most-produced cereal after maize and rice...
(10th)
Pakistan's principal natural resources are arable land
Arable land
In geography and agriculture, arable land is land that can be used for growing crops. It includes all land under temporary crops , temporary meadows for mowing or pasture, land under market and kitchen gardens and land temporarily fallow...
and water. About 25% of Pakistan's total land area is under cultivation and is watered by one of the largest irrigation systems in the world. Pakistan irrigates three times more acres than Russia. Agriculture accounts for about 23% of GDP and employs about 44% of the labor force. Zarai Taraqiati Bank Limited is the largest financial institution geared towards the development of agriculture sector through provision of financial services and technical know how.
Industry
|+Pakistan's two leading companies, as per Forbes Global 2000
Forbes Global 2000
The Forbes Global 2000 is an annual ranking of the top 2000 public companies in the world by Forbes magazine. The ranking is based on a mix of four metrics: sales, profit, assets and market value...
ranking for 2011.
|- style="background:limegreen;"
! Global
ranking !! Company Name
|-
| 1,429 || Oil & Gas Development
Oil and Gas Development Company Limited
Oil and Gas Development Company Limited is a state corporation of Pakistan. It was established in 1961 to prospect, refine and sell oil and gas in Pakistan. By 1966, OGDCL had emerged as the dominant prospector in Pakistan with several significant discoveries in the Indus Basin. OGDCL was...
|-
| 1,995 || PSO
Pakistan State Oil
Pakistan State Oil is the oil market leader in Pakistan. Its well established infrastructure, built at par with international standards, represents 82% of country’s storage...
|-
| Forbes Global 2000 ||
|}
Pakistan's industrial sector accounts for about 24% of GDP. Cotton textile production and apparel manufacturing are Pakistan's largest industries, accounting for about 66% of the merchandise exports and almost 40% of the employed labour force. Other major industries include cement, fertilizer, edible oil, sugar, steel, tobacco, chemicals, machinery, and food processing.
The government is privatizing large-scale parastatal units, and the public sector accounts for a shrinking proportion of industrial output, while growth in overall industrial output (including the private sector) has accelerated. Government policies aim to diversify the country's industrial base and bolster export industries.
- Industries: textiles (8.5% of the GDP), fertilizerFertilizerFertilizer is any organic or inorganic material of natural or synthetic origin that is added to a soil to supply one or more plant nutrients essential to the growth of plants. A recent assessment found that about 40 to 60% of crop yields are attributable to commercial fertilizer use...
, cementCementIn the most general sense of the word, a cement is a binder, a substance that sets and hardens independently, and can bind other materials together. The word "cement" traces to the Romans, who used the term opus caementicium to describe masonry resembling modern concrete that was made from crushed...
, oil refineries, dairy products,food processing, beverages, construction materials, clothing, paperPaperPaper is a thin material mainly used for writing upon, printing upon, drawing or for packaging. It is produced by pressing together moist fibers, typically cellulose pulp derived from wood, rags or grasses, and drying them into flexible sheets....
products, shrimpShrimpShrimp are swimming, decapod crustaceans classified in the infraorder Caridea, found widely around the world in both fresh and salt water. Adult shrimp are filter feeding benthic animals living close to the bottom. They can live in schools and can swim rapidly backwards. Shrimp are an important... - Industrial production growth rate: 6% (2005)
- Large-scale manufacturing growth rate: 19.9% (2005)
SME Sector
In Pakistan SMEs have a significant contribution in the total GDP of Pakistan, according to SMEDA and Economic survey reports, the share in the annual GDP is 40% likewise SMEs generating significant employment opportunities for skilled workers and entrepreneurs. Small and medium scale firms represent nearly 90% of all the enterprises in Pakistan and employ 80% of the non-agricultural labour force. These figures indicate the potential and further growth in this sector.Automotive industry
Pakistan is an emerging market for automobiles and automotive parts offers immense business and investment opportunities. The total contribution of Auto industry to GDP in 2007 is 2.8% which is likely to increase up to 5.6% in the next 5 years. Auto sector presently, contributes 16% to the manufacturing sector which also is expected to increase 25% in the next 7 years. Car ownership in Pakistan has risen by 40% per annum since 2001.CNG industry
As of 2010, Pakistan is one of the largest users of CNG (compressed natural gasCompressed natural gas
Compressed natural gas is a fossil fuel substitute for gasoline , diesel, or propane/LPG. Although its combustion does produce greenhouse gases, it is a more environmentally clean alternative to those fuels, and it is much safer than other fuels in the event of a spill...
) in the world. Presently, more than 3,000 CNG stations are operating in the country in 99 cities and towns, and 1000 more would be set up in the next two years. It has provided employment to over 50,000 people in Pakistan.
Cement industry
In 1947, Pakistan had inherited four cement plants with a total capacity of 0.5 million tons. Some expansion took place in 1956–66 but could not keep pace with the economic development and the country had to resort to imports of cement in 1976-77 and continued to do so till 1994-95. The cement sector consisting of 27 plants is contributing above Rs 30 billion to the national exchequer in the form of taxes.IT industry
Pakistan’s IT industry has been rising steadily since the last three years. A marked increase in software export figures are an indication of this booming industry’s potential. The total number of IT companies increased to 1306 and the total estimated size of IT industry is $2.8 billion. In 2007, Pakistan was for the first time featured in the Global Services Location Index by A.T. KearneyA.T. Kearney
A.T. Kearney is a global management consulting firm, focusing on strategic and operational CEO-agenda concerns. It was founded in 1926, and its head office is in Chicago, Illinois...
and was rated as the 30th best location for offshoring
Offshoring
Offshoring describes the relocation by a company of a business process from one country to another—typically an operational process, such as manufacturing, or supporting processes, such as accounting. Even state governments employ offshoring...
. By 2009, Pakistan had improved its rank by ten places to reach 20th.
Textiles
The Textile Industry is dominated by Punjab. 3% of United States imports regarding clothing and other form of textiles is covered by Pakistan. Textile exports in 1999 were $5.2 billion and rose to become $10.5 billion by 2007. Textile exports managed to increase at a very decent growth of 16% in 2006. In the period July 2007 – June 2008, textile exports were US$10.62 billion. Textile exports share in total export of Pakistan has declined from 67% in 1997 to 55% in 2008, as exports of other textile sectors grew.. The major reason of decline of textile export of Pakistan is the Govt unhealthy policies. Sui Northern Gas Pipelines Ltd. » (SNGPL) notified the textile mills to reduce the supply of gas for five months. Head of All Pakistan Textile Association of Enterprises Anis-ul-Haq has expressed concern about the decision: “Now is the time to the textile industry out of a three-year downturn. The demand for textile products is growing, and if we are not able to fulfill our current orders, we will lose international buyers. “Monthly loss the textile industry because of interruptions in gas supply could reach about U.S. $ 1 billion, or 4 – $ 5 billion for the fiscal year ending June 20 next year.Mining
Pakistan is endowed with significant mineral resources and is emerging as a very promising area for prospecting/exploration for mineral deposits. Based on available information, the country's more than 6,00,000 km² of outcrops area demonstrates varied geological potential for metallic and non-metallic mineral deposits. Except oil, gas and nuclear minerals regulated at federal level, minerals are a provincial subject, under the constitution of the Islamic Republic of Pakistan. Provincial governments are responsible for development and exploitation of minerals, besides, enforcing regulatory regime. In line with the constitutional framework the federal and provincial governments have jointly set out Pakistan's first National Mineral Policy in 1995, duly implemented by the provinces, providing appropriate institutional and regulatory framework and equitable and internationally competitive fiscal regime.In the recent past, exploration by government agencies as well as by multinational mining companies presents ample evidence of the occurrences of sizeable minerals deposits. Recent discoveries of a thick oxidized zone underlain by sulphide zones in the shield area of the Punjab province, covered by thick alluvial cover have opened new vistas for metallic minerals exploration. Pakistan has a large base for industrial minerals. The discovery of coal deposits having over 175 billion tones of reserves at Thar in the Sindh province has given an impetus to develop it as an alternate source of energy. There is vast potential for precious and dimension stones.
The enforcement of Mineral Policy (1995) has paved the way to expand mining sector activities and attract international investment in this sector. International mining companies have responded favorably to the NMP and presently at least four are engaged in mineral projects development.
Currently about 52 minerals are under exploitation although on small scale. The major production is of coal, rock salt and other industrial and construction minerals. The current contribution of the mineral sector to the GDB is about 0.5% and likely to increase considerably on the development and commercial exploitation of Saindak & Reco Diq copper and gold deposits (world's largest gold mine), Duddar zinc lead, Thar coal and gemstone deposits.
Services
Transport
Transport or transportation is the movement of people, cattle, animals and goods from one location to another. Modes of transport include air, rail, road, water, cable, pipeline, and space. The field can be divided into infrastructure, vehicles, and operations...
, storage
Warehouse
A warehouse is a commercial building for storage of goods. Warehouses are used by manufacturers, importers, exporters, wholesalers, transport businesses, customs, etc. They are usually large plain buildings in industrial areas of cities and towns. They usually have loading docks to load and unload...
, communications
Telecommunication
Telecommunication is the transmission of information over significant distances to communicate. In earlier times, telecommunications involved the use of visual signals, such as beacons, smoke signals, semaphore telegraphs, signal flags, and optical heliographs, or audio messages via coded...
, finance
Financial services
Financial services refer to services provided by the finance industry. The finance industry encompasses a broad range of organizations that deal with the management of money. Among these organizations are credit unions, banks, credit card companies, insurance companies, consumer finance companies,...
, and insurance account for 24% of this sector, and wholesale and retail trade about 30%. Pakistan is trying to promote the information industry
Information industry
The information industry or information industries are industries that are information intensive in one way or the other. It is considered one of the most important economic sectors for a variety of reasons....
and other modern service industries
Quaternary sector of industry
The quaternary sector of the economy is a way to describe a knowledge-based part of the economy which typically includes services such as information generation and sharing, information technology, consultation, education, research and development, financial planning, and other knowledge-based...
through incentives such as long-term tax holidays
Tax competition
Tax competition, a form of regulatory competition, exists when governments are encouraged to lower fiscal burdens to either encourage the inflow of productive resources or discourage the exodus of those resources...
.
The government is acutely conscious of the immense job growth opportunities in service sector and has launched aggressive privatisation of telecommunications, utilities and banking despite union unrest.
Communication
Deregulation
Deregulation is the removal or simplification of government rules and regulations that constrain the operation of market forces.Deregulation is the removal or simplification of government rules and regulations that constrain the operation of market forces.Deregulation is the removal or...
of the telecommunication industry, the sector has seen an exponential growth. Pakistan Telecommunication Company Ltd
Pakistan Telecommunication Company Ltd
Pakistan Telecommunication Company Limited is the largest telecommunication company in Pakistan.The company provides telephony services nation-wide and is the backbone for country's telecommunication infrastructure despite arrival of a dozen other telecommunication comanies, including giants like...
has emerged as a successful Forbes 2000 conglomerate with over US $1 billion in sales in 2005. The mobile telephone market has exploded fourteen-fold since 2000 to reach a subscriber base of 91 million users in 2008, one of the highest mobile teledensities in the entire world. In addition, there are over 6 million landlines in the country with 100% fibre-optic network and coverage via WLL in even the remotest areas. As a result, Pakistan won the prestigious Government Leadership award of GSM Association
GSM Association
The GSM Association is an association of mobile operators and related companies devoted to supporting the standardizing, deployment and promotion of the GSM mobile telephone system...
in 2006.
The contribution of the telecom sector to the national exchequer increased to Rs 110 billion in the year-end 2007-08 on account of the general sales tax, activation charges and other steps as compared to Rs 100 billion in the year-end 2006-07.
The World Bank estimates that it takes about 3 days to get a phone connection in Pakistan.
In Pakistan, the following are the top mobile phone operators:
- MobilinkMobilinkPakistan Mobile Communications Limited, better known as Mobilink GSM, is a telecommunication service provider in Pakistan. The company is Pakistan's leading cellular operator with a subscriber base of 31.5m and market share of 31% in October 2010....
(Parent: Orascom Telecom HoldingOrascom Telecom HoldingOrascom Telecom Holding S.A.E. is a leading international telecommunications company operating GSM networks in the Middle East, Africa, Canada and Asia. It started its operations in Egypt by launching the first egyptian mobile operator in 1998, ....
, Egypt) - UfoneUfoneUfone GSM is a Pakistani GSM cellular service provider, It's one of five GSM Mobile companies in Pakistan, and is a subsidiary of Pakistan Telecommunication Company. After the privatization of PTCL, Ufone is now owned by Etisalat. Ufone has a subscriber base of 20.23 million as of September 2010.-...
(Parent: PTCL (EtisalatEtisalatEmirates Telecommunications Corporation, branded trade name Etisalat is a UAE based telecommunications services provider, currently operating in 18 countries across Asia, the Middle East and Africa...
), Pakistan/UAE) - TelenorTelenorTelenor Group is the incumbent telecommunications company in Norway, with headquarters located at Fornebu, close to Oslo. Today, Telenor Group is mostly an international wireless carrier with operations in Scandinavia, Eastern Europe and Asia, working predominantly under the Telenor brand...
(Parent: TelenorTelenorTelenor Group is the incumbent telecommunications company in Norway, with headquarters located at Fornebu, close to Oslo. Today, Telenor Group is mostly an international wireless carrier with operations in Scandinavia, Eastern Europe and Asia, working predominantly under the Telenor brand...
, Norway) - Warid (Parent: Abu Dhabi Group / SingTel, UAE/Singapore)
- ZongZONGZONG is the first international brand of China Mobile, launched in Pakistan in 2008. The company is often cited as China Mobile .In October 2011, ZONG signed a three-year partnership deal with the English football club Manchester United F.C....
(Parent: China MobileChina MobileChina Mobile Limited is a Chinese state-owned telecommunication company that provides mobile voice and multimedia services through its nationwide mobile telecommunications network, the largest of its kind in the world...
, China)
By March 2009, Pakistan had 91 million mobile subscribers - 25 million more subscribers than reported in the same period in 2008. In addition to the 3.1 million fixed lines, while as many as 2.4 million are using Wireless Local Loop connections. Sony Ericsson, Nokia and Motorola along with Samsung and LG remain the most popular brands among customers.
Pakistan is on the verge of a telecom revolution and is by far the most attractive sector in Pakistan in terms of Foreign Direct Investment coming into the country. Since liberalisation, over the past four years, the Pakistani telecom sector has attracted more than $9 billion in foreign investments. During 2007-08, the Pakistani communication sector alone received $1.62 billion in Foreign Direct Investment (FDI) – about 30% of the country’s total foreign direct investment.
Present growth of state-of-the-art infrastructures in the telecoms sector during the last four years has been the result of the PTA's vision and implementation of the deregulation policy. Paging and mobile (cellular) telephones were adopted early and freely. Cellular phones and the Internet were adopted through a rather laissez-faire
Laissez-faire
In economics, laissez-faire describes an environment in which transactions between private parties are free from state intervention, including restrictive regulations, taxes, tariffs and enforced monopolies....
policy with a proliferation of private service providers that led to the fast adoption. With a rapid increase in the number of Internet users and ISP
Internet service provider
An Internet service provider is a company that provides access to the Internet. Access ISPs directly connect customers to the Internet using copper wires, wireless or fiber-optic connections. Hosting ISPs lease server space for smaller businesses and host other people servers...
s, and a large English-speaking population, Pakistani society has seen an unparalleled revolution in communications.
According to the PC World, a total of 6.37 billion text messages were sent through Acision messaging systems across Asia Pacific over the 2008/2009 Christmas and New Year period. Pakistan was amongst the top five ranker with one of the highest SMS traffic with 763 million messages.
Pakistan is ranked 4th in terms of broadband Internet growth in the world, as the subscriber base of broadband Internet has been increasing rapidly. The rankings are released by Point Topic Global broadband analysis, a global research centre.
- Pakistan has more than 20 million Internet users in 2009. The country is said to have a potential to absorb up to 50 million mobile phone Internet users in the next 5 years thus a potential of nearly 1 million connections per month.
- Almost all of the main government departments, organisations and institutions have their own websites.
- The use of search engineWeb search engineA web search engine is designed to search for information on the World Wide Web and FTP servers. The search results are generally presented in a list of results often referred to as SERPS, or "search engine results pages". The information may consist of web pages, images, information and other...
s and instant messagingInstant messagingInstant Messaging is a form of real-time direct text-based chatting communication in push mode between two or more people using personal computers or other devices, along with shared clients. The user's text is conveyed over a network, such as the Internet...
services is also booming. Pakistanis are some of the most ardent chattersOnline chatOnline chat may refer to any kind of communication over the Internet, that offers an instantaneous transmission of text-based messages from sender to receiver, hence the delay for visual access to the sent message shall not hamper the flow of communications in any of the directions...
on the Internet, communicating with users all over the world. Recent years have seen a huge increase in the use of online marriage services, for example, leading to a major re-alignment of the tradition of arranged marriageArranged marriageAn arranged marriage is a practice in which someone other than the couple getting married makes the selection of the persons to be wed, meanwhile curtailing or avoiding the process of courtship. Such marriages had deep roots in royal and aristocratic families around the world...
s. - As of 2007 there were six cell phone companies operating in the country with nearly 90 million mobile phone users in the country.
- Wireless local loopWireless local loopWireless local loop , is a term for the use of a wireless communications link as the "last mile / first mile" connection for delivering plain old telephone service and/or broadband Internet to telecommunications customers....
and the landlineLandlineA landline was originally an overland telegraph wire, as opposed to an undersea cable. Currently, landline refers to a telephone line which travels through a solid medium, either metal wire or optical fibre, as distinguished from a mobile cellular line, where transmission is via radio waves...
telephony sector has also been liberalized and private sector has entered thus increasing the teledensity rate. In mid-2008, the Local Loop installed capacity reached around 5.5 million. - Telecom industry created of 80,000 jobs directly and 500,000 jobs indirectly.
The Federal Bureau of Statistics
Federal Bureau of Statistics
The Federal Bureau of Statistics, also known as FBS is a Government of Pakistan's major and executive and federal department charged with the national statistical services and to provide solid and comprehensive statistical research. The FBS is one of the departments of the Statistics Division of...
provisionally valued this sector at Rs.982,353 million in 2005 thus registering over 91% growth since 2000.
Railways
A massive rehabilitation plan worth $1 billion over five years for Pakistan Railways has been announced by the government in 2005.A new rail link trial has been established from Islamabad-Pakistan via Teharan-Iran Via Istanbul-Turkey .Furthermore it would promote trade, tourism, and would also would serve as an effective link for the exports to Europe (as Turkey part of Europe and Asia].
Aviation
Pakistan International Airlines
Pakistan International Airlines Corporation commonly known as PIA, is the flag carrier airline of Pakistan. The airline has its head office on the grounds of Jinnah International Airport in Karachi. and operates scheduled services to 24 domestic destinations and 38 international destinations in 27...
, the flagship airline of Pakistan's civil aviation
Civil aviation
Civil aviation is one of two major categories of flying, representing all non-military aviation, both private and commercial. Most of the countries in the world are members of the International Civil Aviation Organization and work together to establish common standards and recommended practices...
industry, has turnover exceeding $1 billion in 2005. The government announced a new shipping policy in 2006 permitting banks and financial institutions to mortgage ships.
Private sector airlines in Pakistan include Airblue
Airblue
Airblue Limited is a private airline with its head office on the 12th floor of the Islamabad Stock Exchange Towers in Islamabad, Pakistan. It is Pakistan's second largest airline with over 20% share of the domestic market...
, which serves the main cities within Pakistan in addition to destinations in the Gulf and Manchester
Manchester
Manchester is a city and metropolitan borough in Greater Manchester, England. According to the Office for National Statistics, the 2010 mid-year population estimate for Manchester was 498,800. Manchester lies within one of the UK's largest metropolitan areas, the metropolitan county of Greater...
in the United Kingdom
United Kingdom
The United Kingdom of Great Britain and Northern IrelandIn the United Kingdom and Dependencies, other languages have been officially recognised as legitimate autochthonous languages under the European Charter for Regional or Minority Languages...
. The other private carrier is Shaheen Air International whose network covers the main cities of Pakistan and the Gulf.
Wholesale and retail trade
The Federal Bureau of StatisticsFederal Bureau of Statistics
The Federal Bureau of Statistics, also known as FBS is a Government of Pakistan's major and executive and federal department charged with the national statistical services and to provide solid and comprehensive statistical research. The FBS is one of the departments of the Statistics Division of...
provisionally valued this sector at Rs.1,358,309 million in 2005 thus registering over 96% growth since 2000.
Banking, finance and insurance
A reduction in the fiscal deficit has resulted in less government borrowing in the domestic money market, lower interest rates, and an expansion in private sector lending to businesses and consumers. Foreign exchange reserves continued to reach new levels in 2007, supported by robust export growth and steady worker remittances.Pakistan has been ranked 34 out of 52 countries in the World Economic Forum's first Financial Development Report, which was released in Pakistan through the Competitiveness Support Fund (CSF) in December, 2008. Under Factors, Policies and Institutions pillar, Pakistan ranks 49th in institutional environment, 50th in business environment and 37th in Financial Stability. In the Financial Intermediation Pillar Pakistan ranks 25th in banks, 42nd in non banks and 17th in Financial Markets. Under Capital Availability and Access, Pakistan ranks 33rd.
Pakistan's banking sector has remained remarkably strong and resilient during the world financial crisis in 2008–09, a feature which has served to attract a substantial amount of FDI in the sector. Stress tests conducted on June 2008 data indicate that the large banks are relatively robust, with the medium and small-sized banks positioning themselves in niche markets. Banking sector turned profitable in 2002. Their profits continued to rise for the next five years and peaked to Rs 84.1 ($1.1 billion) billion in 2006.
The credit card market continued its strong growth with sales crossing the 1 million mark in mid-2005. Since 2000 Pakistani banks have begun aggressive marketing of consumer finance to the emerging middle class, allowing for a consumption boom (more than a 7-month waiting list for certain car models) as well as a construction bonanza.
The Federal Bureau of Statistics
Federal Bureau of Statistics
The Federal Bureau of Statistics, also known as FBS is a Government of Pakistan's major and executive and federal department charged with the national statistical services and to provide solid and comprehensive statistical research. The FBS is one of the departments of the Statistics Division of...
provisionally valued this sector at Rs.311,741 million in 2005 thus registering over 166% growth since 2000.
Ownership of dwellings
The property sector has expanded twenty-threefold since 2001, particularly in metropolises like Lahore. Nevertheless, the Karachi Chamber of Commerce and Industry estimated in late 2006 that the overall production of housing units in Pakistan has to be increased to 0.5 million units annually to address 6.1 million backlog of housing in Pakistan for meeting the housing shortfall in next 20 years. The report noted that the present housing stock is also rapidly aging and an estimate suggests that more than 50% of stock is over 50 years old. It is also estimated that 50% of the urban population now lives in slums and squatter settlements. The report said that meeting the backlog in housing, besides replacement of out-lived housing units, is beyond the financial resources of the government. This necessitates putting in place a framework to facilitate financing in the formal private sector and mobilise non-government resources for a market-based housing finance system.The Federal Bureau of Statistics
Federal Bureau of Statistics
The Federal Bureau of Statistics, also known as FBS is a Government of Pakistan's major and executive and federal department charged with the national statistical services and to provide solid and comprehensive statistical research. The FBS is one of the departments of the Statistics Division of...
provisionally valued this sector at Rs.185,376 million in 2005 thus registering over 49% growth since 2000.
Public administration and defence
The Federal Bureau of Statistics provisionally valued this sector at Rs.389,545 million in 2005 thus registering over 65% growth since 2000.Social, community and personal services
The Federal Bureau of Statistics provisionally valued this sector at Rs.631,229 million in 2005 thus registering over 78% growth since 2000.Electricity
For years, the matter of balancing Pakistan's supply against the demand for electricity has remained a largely unresolved matter. Pakistan faces a significant challenge in revamping its network responsible for the supply of electricity.While the government claims credit for overseeing a turnaround in the economy through a comprehensive recovery, it has just failed to oversee a similar improvement in the quality of the network for electricity supply.
Some officials even go as far as claiming that the frequent power cuts across Pakistan today are indicative of an emerging prosperity as there is fast-rising demand for electricity. And yet, the failure to meet the demand is indeed indicative of a challenge to that very prosperity. This is despite Pakistan having tremendous potential to generate wind power. Apart from this, most cities in Pakistan receive substantial sunlight throughout the year, which would suggest good conditions for investment in solar energy. If the rich people in Pakistan are shifted to solar Engery that they should be forced to purchase solar panels, the shortfall can be controlled. this will make the economy boos again as before 2007.
Recently, the Minister for Water and Power, Raja Pervez Ashraf, has claimed that load-shedding will end by December 2009 through employing rental power generation units and that the country will be self-sufficient by the year 2011. Critics argue that this is overly optimistic.
Power cuts continue by 30 june 2011, despite the minister's hollow claims.
Investment
Foreign direct investmentForeign direct investment
Foreign direct investment or foreign investment refers to the net inflows of investment to acquire a lasting management interest in an enterprise operating in an economy other than that of the investor.. It is the sum of equity capital,other long-term capital, and short-term capital as shown in...
(FDI) in Pakistan soared by 180.6 per cent year-on-year to US$2.22 billion and portfolio investment by 276 per cent to $407.4 million during the first nine months of fiscal year 2006, the State Bank of Pakistan
State Bank of Pakistan
The State Bank of Pakistan is the central bank of Pakistan. While its constitution, as originally laid down in the State Bank of Pakistan Order 1948, remained basically unchanged until January 1, 1974, when the bank was nationalized, the scope of its functions was considerably enlarged...
(SBP) reported on April 24. During July–March 2005-06, FDI year-on-year increased to $2.224 billion from only $792.6 million and portfolio investment to $407.4 million, whereas it was $108.1 million in the corresponding period last year, according to the latest statistics released by the State Bank.
Pakistan has achieved FDI of almost $8.4 billion in the financial year 06/07, surpassing the government target of $4 billion. Foreign investment had significantly declined by 2010, dropping by 54.6% due to Pakistan's political instability and weak law and order, according to the Bank of Pakistan.
Pakistan is now the most investment-friendly nation in South Asia. Business regulations have been profoundly overhauled along liberal lines, especially since 1999. Most barriers to the flow of capital and international direct investment have been removed. Foreign investors do not face any restrictions on the inflow of capital, and investment of up to 100% of equity participation is allowed in most sectors. Unlimited remittance of profits, dividends, service fees or capital is now the rule. Business regulations are now among the most liberal in the region. This was confirmed by the World Bank
World Bank
The World Bank is an international financial institution that provides loans to developing countries for capital programmes.The World Bank's official goal is the reduction of poverty...
's Ease of Doing Business Index
Ease of Doing Business Index
The Ease of Doing Business Index is an index created by the World Bank. Higher rankings indicate better, usually simpler, regulations for businesses and stronger protections of property rights...
report published in September 2009 ranking Pakistan (at 85th) well ahead of neighbours like China (at 89th) and India (at 133rd).
Pakistan is attracting an increasingly large amount of private equity and was the ranked as number 20 in the world based on the amount of private equity entering the nation. Pakistan has been able to attract a large portion of the global private equity investments because of economic reforms initiated in 2003 that have provided foreign investors with greater assurances for the stability of the nation and their ability to repatriate invested funds in the future.
Tariffs have been reduced to an average rate of 16%, with a maximum of 25% (except for the car industry). The privatisation process, which started in the early 1990s, has gained momentum, with most of the banking system privately owned, and the oil sector targeted to be the next big privatisation operation.
The recent improvements in the economy and the business environment have been recognised by international rating agencies such as Moody’s and Standard and Poor’s (country risk upgrade at the end of 2003).
Foreign acquisitions and mergers
With the rapid growth in Pakistan's economy, foreign investors are taking a keen interest in the corporate sector of Pakistan. In recent years, majority stakes in many corporations have been acquired by multinational groups.- PICIC by Singapore based Temasek HoldingsTemasek HoldingsTemasek Holdings is an investment company owned by the government of Singapore. With an international staff of 380 people, it manages a portfolio of about S$193 billion at end of March 2011, focused primarily in Asia...
for $339 million - Union Bank by Standard Chartered BankStandard Chartered BankStandard Chartered PLC is a multinational financial services company headquartered in London, United Kingdom with operations in more than seventy countries...
for $487 million - Prime Commercial Bank by ABN AmroABN AMROABN AMRO Bank N.V. is a Dutch state-owned bank with headquarters in Amsterdam. It was re-established, in its current form, in 2009 following the acquisition and break up of ABN AMRO Group by a banking consortium consisting of Royal Bank of Scotland Group, Santander and Fortis...
for $228 million - PakTel by China MobileChina MobileChina Mobile Limited is a Chinese state-owned telecommunication company that provides mobile voice and multimedia services through its nationwide mobile telecommunications network, the largest of its kind in the world...
for $460 million - PTCL by EtisalatEtisalatEmirates Telecommunications Corporation, branded trade name Etisalat is a UAE based telecommunications services provider, currently operating in 18 countries across Asia, the Middle East and Africa...
for $1.8 billion - Additional 57.6% shares of Lakson Tobacco Company acquired by Philip Morris InternationalPhilip Morris InternationalPhilip Morris International is an international tobacco company, with products sold in over 160 countries. In 2007, it held a 15.6% share of the international cigarette market outside of the USA and reported revenues net of excise taxes of $22.8 billion and operating income of $8.9 billion.Until...
for $382 million
The foreign exchange receipts from these sales are also helping cover the current account deficit.
Foreign trade
World Trade Organization
The World Trade Organization is an organization that intends to supervise and liberalize international trade. The organization officially commenced on January 1, 1995 under the Marrakech Agreement, replacing the General Agreement on Tariffs and Trade , which commenced in 1948...
, and has bilateral and multilateral trade agreements with many nations and international organizations.
Fluctuating world demand for its exports, domestic political uncertainty, and the impact of occasional droughts on its agricultural production have all contributed to variability in Pakistan's trade deficit.
In the six months to December 2003, Pakistan recorded a current account surplus of $1.761 billion, roughly 5% of GDP. Pakistan's exports continue to be dominated by cotton textiles and apparel, despite government diversification efforts. Exports grew by 19.1% in FY 2002-03. Major imports include petroleum and petroleum products, edible oil, chemicals, fertilizer, capital goods, industrial raw materials, and consumer products.
Past external imbalances left Pakistan with a large foreign debt burden. Principal and interest payments in FY 1998-99 totaled $2.6 billion, more than double the amount paid in FY 1989-90. Annual debt service peaked at over 34% of export earnings before declining.
With a current account surplus in recent years, Pakistan's hard currency reserves have grown rapidly. Improved fiscal management, greater transparency and other governance reforms have led to upgrades in Pakistan's credit rating. Together with lower global interest rates, these factors have enabled Pakistan to prepay, refinance and reschedule its debts to its advantage. Despite the country's current account surplus and increased exports in recent years, Pakistan still has a large merchandise-trade deficit. The budget deficit in fiscal year 1996-97 was 6.4% of GDP. The budget deficit in fiscal year 2003-04 is expected to be around 4% of GDP.
In the late 1990s Pakistan received about $2.5 billion per year in loan/grant assistance from international financial institutions (e.g., the IMF, the World Bank, and the Asian Development Bank
Asian Development Bank
The Asian Development Bank is a regional development bank established on 22 August 1966 to facilitate economic development of countries in Asia...
) and bilateral donors. Increasingly, the composition of assistance to Pakistan shifted away from grants toward loans repayable in foreign exchange. All new U.S. economic assistance to Pakistan was suspended after October 1990, and additional sanctions were imposed after Pakistan's May 1998 nuclear weapons tests. The sanctions were lifted by president George W. Bush after Pakistani president Musharraf allied Pakistan with the U.S. in its war on terror. Having improved its finances, the government refused further IMF assistance, and consequently the IMF program was ended. The government is also reducing tariff barriers with bilateral and multilateral agreements.
While the country has a current account surplus and both imports and exports have grown rapidly in recent years, it still has a large merchandise-trade deficit. This deficit amounted to over 15 billion in 2010. The budget deficit in fiscal year 2004-2005 was 3.4% of GDP. The budget deficit in fiscal year 2005-06 is expected to be over 4% of GDP. Economists believe that the soaring trade deficit would have an adverse impact on Pakistani rupee by depreciating its value against dollar (1 US $ = 60 Rupees (March 2006) ) and other currencies.
One of the main reasons that contributed to the increase in trade deficit is the increased imports of earthquake relief related items, especially tents, tarpaulin and plastic sheets to provide temporary shelter to the survivors of earthquake of October 8, 2005 in Azad Jammu and Kashmir and parts of Khyber-Pakhtunkhwa, an official said. The rise in the trade gap was also fuelled by high oil import prices, food items, machinery and automobiles.
The Petroleum Ministry says that this year the bill of oil imports was expected to reach $6.5 billion against $4.6 billion in the last fiscal year, which is the main reason behind the all-time high trade deficit.
The EU is the single largest trading partner of Pakistan absorbing over one-third of the exports in 2003. In 2010, the EU accounted for 12.4% of Pakistani imports and 22.6% of its exports.
Exports
Pakistan's exports increased more than 100% from $7.5 billion in 1999 to stand at $18 billion in the financial year 2007-2008.Pakistan exports rice
Rice
Rice is the seed of the monocot plants Oryza sativa or Oryza glaberrima . As a cereal grain, it is the most important staple food for a large part of the world's human population, especially in East Asia, Southeast Asia, South Asia, the Middle East, and the West Indies...
, kinnow
Kinnow
The kinnow is a variety of citrus fruit cultivated extensively in India and Pakistani Punjab Province. It is a hybrid of two citrus cultivars — "King" x "Willow Leaf" — first developed by H. B. Frost at the Citrus Research Centre of the University of California, Riverside, USA...
s, mangoes, furniture
Furniture
Furniture is the mass noun for the movable objects intended to support various human activities such as seating and sleeping in beds, to hold objects at a convenient height for work using horizontal surfaces above the ground, or to store things...
, cotton fiber, cement
Cement
In the most general sense of the word, a cement is a binder, a substance that sets and hardens independently, and can bind other materials together. The word "cement" traces to the Romans, who used the term opus caementicium to describe masonry resembling modern concrete that was made from crushed...
, tile
Tile
A tile is a manufactured piece of hard-wearing material such as ceramic, stone, metal, or even glass. Tiles are generally used for covering roofs, floors, walls, showers, or other objects such as tabletops...
s, marble
Marble
Marble is a metamorphic rock composed of recrystallized carbonate minerals, most commonly calcite or dolomite.Geologists use the term "marble" to refer to metamorphosed limestone; however stonemasons use the term more broadly to encompass unmetamorphosed limestone.Marble is commonly used for...
, textile
Textile
A textile or cloth is a flexible woven material consisting of a network of natural or artificial fibres often referred to as thread or yarn. Yarn is produced by spinning raw fibres of wool, flax, cotton, or other material to produce long strands...
s, clothing
Clothing
Clothing refers to any covering for the human body that is worn. The wearing of clothing is exclusively a human characteristic and is a feature of nearly all human societies...
, leather
Leather
Leather is a durable and flexible material created via the tanning of putrescible animal rawhide and skin, primarily cattlehide. It can be produced through different manufacturing processes, ranging from cottage industry to heavy industry.-Forms:...
goods, sports goods (renowned for footballs/soccer balls), Cutlery
Cutlery
Cutlery refers to any hand implement used in preparing, serving, and especially eating food in the Western world. It is more usually known as silverware or flatware in the United States, where cutlery can have the more specific meaning of knives and other cutting instruments. This is probably the...
, surgical instruments, electrical appliance
Home appliance
Home appliances are electrical/mechanical machines which accomplish some household functions, such as cooking or cleaning. Home appliances can be classified into:*Major appliances, or White goods*Small appliances, or Brown goods...
s, software, carpet
Carpet
A carpet is a textile floor covering consisting of an upper layer of "pile" attached to a backing. The pile is generally either made from wool or a manmade fibre such as polypropylene,nylon or polyester and usually consists of twisted tufts which are often heat-treated to maintain their...
s, rugs
Carpet
A carpet is a textile floor covering consisting of an upper layer of "pile" attached to a backing. The pile is generally either made from wool or a manmade fibre such as polypropylene,nylon or polyester and usually consists of twisted tufts which are often heat-treated to maintain their...
, ice cream, livestock meat, chicken
Chicken
The chicken is a domesticated fowl, a subspecies of the Red Junglefowl. As one of the most common and widespread domestic animals, and with a population of more than 24 billion in 2003, there are more chickens in the world than any other species of bird...
, powdered milk
Powdered milk
Powdered milk is a manufactured dairy product made by evaporating milk to dryness. One purpose of drying milk is to preserve it; milk powder has a far longer shelf life than liquid milk and does not need to be refrigerated, due to its low moisture content. Another purpose is to reduce its bulk for...
, wheat
Wheat
Wheat is a cereal grain, originally from the Levant region of the Near East, but now cultivated worldwide. In 2007 world production of wheat was 607 million tons, making it the third most-produced cereal after maize and rice...
, seafood
Seafood
Seafood is any form of marine life regarded as food by humans. Seafoods include fish, molluscs , crustaceans , echinoderms . Edible sea plants, such as some seaweeds and microalgae, are also seafood, and are widely eaten around the world, especially in Asia...
(especially shrimp/prawns), vegetables, processed food items, Pakistani-assembled Suzuki
Suzuki
is a Japanese multinational corporation headquartered in Hamamatsu, Japan that specializes in manufacturing compact automobiles and 4x4 vehicles, a full range of motorcycles, all-terrain vehicles , outboard marine engines, wheelchairs and a variety of other small internal combustion engines...
s (to Afghanistan and other countries), defense
Defense (military)
Defense has several uses in the sphere of military application.Personal defense implies measures taken by individual soldiers in protecting themselves whether by use of protective materials such as armor, or field construction of trenches or a bunker, or by using weapons that prevent the enemy...
equipment (submarines, tanks, radars), salt
Salt
In chemistry, salts are ionic compounds that result from the neutralization reaction of an acid and a base. They are composed of cations and anions so that the product is electrically neutral...
, onyx
Onyx
Onyx is a banded variety of chalcedony. The colors of its bands range from white to almost every color . Commonly, specimens of onyx contain bands of black and/or white.-Etymology:...
, engineering
Engineering
Engineering is the discipline, art, skill and profession of acquiring and applying scientific, mathematical, economic, social, and practical knowledge, in order to design and build structures, machines, devices, systems, materials and processes that safely realize improvements to the lives of...
goods, and many other items. Pakistan produces and exports cements to Asia and the Middle East
Middle East
The Middle East is a region that encompasses Western Asia and Northern Africa. It is often used as a synonym for Near East, in opposition to Far East...
. In August 2007, Pakistan started exporting cement
Cement
In the most general sense of the word, a cement is a binder, a substance that sets and hardens independently, and can bind other materials together. The word "cement" traces to the Romans, who used the term opus caementicium to describe masonry resembling modern concrete that was made from crushed...
to India to fill in the shortage there caused by the building boom. Russia is a growing market for Pakistani exporters. In 2009/2010 the export target of Pakistan was US $20 billion.
As of April 2011,Pakistans exports stand at US $25 billion.
External Imbalances
Pakistan suffered a merchandise trade deficit of $13.528 billion for the financial year 2006-7. The gap has considerably widened since 2002-3 when the deficit was only $1.06 billion. Services sector deficit for 2006-2007 stood at $4.125 billion which equals the services export of $4.125 billion for the same year.The combined deficit in services and goods stand at $17.653 billion which is approx 83.5% of country's total export of $21.136 (Goods and services). The rise in the trade gap has been attributed to high oil import bill, and rise in the prices of food items, machinery and automobiles.
Current account deficit - Current account deficit for 2006-7 reached $7.016 billion up by 41% over previous year's $4.490 billion.
Since the beginning of 2008, Pakistan's economic outlook has taken a dramatic downturn. Security concerns stemming from the nation's role in the War on Terror
War on Terror
The War on Terror is a term commonly applied to an international military campaign led by the United States and the United Kingdom with the support of other North Atlantic Treaty Organisation as well as non-NATO countries...
have created great instability and led to a decline in FDI from a height of approximately $8 bn to $3.5bn for the current fiscal year. Concurrently, the insurgency has forced massive capital flight from Pakistan to the Gulf. Combined with high global commodity prices, the dual impact has shocked Pakistan's economy, with gaping trade deficits, high inflation and a crash in the value of the Rupee, which has fallen from 60-1 USD to over 80-1 USD in a few months. For the first time in years, it may have to seek external funding as Balance of Payments support. Consequently, S&P lowered Pakistan’s foreign currency debt rating to CCC-plus from B, just several notches above a level that would indicate default. Pakistan’s local currency debt rating was lowered to B-minus from BB-minus. Credit agency Moody’s Investors Service cut its outlook on Pakistan’s debt to negative from stable due to political uncertainty, though it maintained the country’s rating at B2.The cost of protection against a default in Pakistan’s sovereign debt trades at 1,800 basis points, according to its five year credit default swap, a level that indicates investors believe the country is already in or will soon be in default.
The middle term however may be less turbulent, depending on the political environment. The EIU hsd estimated that inflation should drop back to single digits in 2010, and that growth would pick up to over 5% per annum by 2011. However, the unprecedented floods of 2010 which encapsulated 20% of Pakistan's land area, have caused a monetary damage estimated to be in excess of $10bn, as a result of which real growth is almost flat and EIU's original targets will have to be revised. Much like previous natural disasters which have afflicted Pakistan, the floods of 2010 inflicted damage of epic proportions. However, the philanthropic nature of Pakistani people and widespread coverage by a fiercely independent and established media has proven yet again that Pakistan is an incredibly resilient nation.
Economic aid
Pakistan receives economic aid from several sources as loans and grants. The International Monetary FundInternational Monetary Fund
The International Monetary Fund is an organization of 187 countries, working to foster global monetary cooperation, secure financial stability, facilitate international trade, promote high employment and sustainable economic growth, and reduce poverty around the world...
(IMF), World Bank
World Bank
The World Bank is an international financial institution that provides loans to developing countries for capital programmes.The World Bank's official goal is the reduction of poverty...
(WB), Asian Development Bank
Asian Development Bank
The Asian Development Bank is a regional development bank established on 22 August 1966 to facilitate economic development of countries in Asia...
(ADB), etc. provides long term loans to Pakistan. Pakistan also receives bilateral aid from developed and oil-rich countries.
The Asian Development Bank
Asian Development Bank
The Asian Development Bank is a regional development bank established on 22 August 1966 to facilitate economic development of countries in Asia...
will provide close to $6 billion development assistance to Pakistan during 2006-9. The World Bank
World Bank
The World Bank is an international financial institution that provides loans to developing countries for capital programmes.The World Bank's official goal is the reduction of poverty...
unveiled a lending program of up to $6.5 billion for Pakistan under a new four-year, 2006–2009, aid strategy showing a significant increase in funding aimed largely at beefing up the country's infrastructure. Japan
Japan
Japan is an island nation in East Asia. Located in the Pacific Ocean, it lies to the east of the Sea of Japan, China, North Korea, South Korea and Russia, stretching from the Sea of Okhotsk in the north to the East China Sea and Taiwan in the south...
will provide $500 million annual economic aid to Pakistan. In November 2008, the International Monetary Fund (IMF) has approved a loan of 7.6 Billion to Pakistan, to help stabilize and rebuild the country's economy.
More recently the government of Pakistan received an economic aid of US $5bn dollars out of which the US pledge of $1bn was described as a down-payment on the previously announced $1.5bn already promised to Pakistan for each of the next five years. The European Union promised $640m over four years, while reports said Saudi Arabia had pledged $700m over two years. Overall Friends of Pakistan had pledged $1.6 billion in aid, which would help Pakistan move forward on its way to self-reliance.
Remittances
The remittances of Pakistanis living abroad has played important role in Pakistan's economy and foreign exchange reserves. The Pakistanis settled in Western Europe and North America are important sources of remittances to Pakistan. Since 1973 the Pakistani workers in the oil rich Arab states have been sources of billions dollars of remittances.The 7 million strong Pakistani diaspora
Pakistani diaspora
The Pakistani diaspora, or an overseas Pakistani is a Pakistani citizen who has migrated to another country or a person of Pakistani origin who is born outside Pakistan. There are approximately 7 million Pakistanis living abroad...
, contributed US$11.2 billion to the economy in FY2011. The major source countries of remittances to Pakistan include UAE, USA, Saudi Arabia, GCC countries (including Bahrain, Kuwait, Qatar and Oman), Australia, Canada, Japan, UK and EU countries like Norway, Switzerland, etc. .
The State Bank of Pakistan (SBP) has announced that remittances sent home by overseas Pakistani workers have crossed the $10 billion mark for the first time in the country’s history as the figure reached $10.1 billion in 11 months (July-May) of the current financial year.
The 11-month figure was $2.07 billion or 25 per cent more than $8.09 billion worth of remittances received in the same period of the previous year.
In May, overseas workers remitted over $1 billion, which was the third consecutive month that remittances crossed this mark. The country received $1.05 billion, $1.03 billion and $1.05 billion in March, April and May respectively.
Citing reasons for the sharp increase in remittances, analysts say that a crackdown on the illegal Hundi and Hawala money transfer systems, swift processing and transfer of money by the banking channel and incentives for overseas Pakistanis have encouraged them to utilise legal channels. The flow of charity money after last summer floods has also given a boost to the remittances this year, they say.
In the July-May period, remittances from Saudi Arabia, UAE, USA, GCC countries (including Bahrain, Kuwait, Qatar and Oman), UK and EU countries were $2.38 billion, $2.33 billion, $1.86 billion, $1.18 billion, $1.09 billion and $320.93 million respectively. In comparison, remittances stood at $1.72 billion, $1.84 billion, $1.61 billion, $1.13 billion, $793.91 million and $229.74 million respectively in July-May 2009-10.
Remittances received from Norway, Switzerland, Australia, Canada, Japan and other countries during the 11 months amounted to $926.86 million against $740.96 million in the same period last year..
Government finances
Fiscal budget summary- Fiscal year: 1 July - 30 June
- Budget outlay: Rs 3.259 trillion (FY2010/11)
- Revenues: $19.8 billion
- Expenditures:
- Debt - external: $50 billion (2010 est.)
- Economic aid - recipient: $1.2 billion (FY2010/11)
Revenues and taxation
Pakistan has a low tax/GDP ratio, which it is trying to improve. The current tax-to-GDP ration is estimated to be between 8%-9% which is far below developing other countries of the region such as India (15%) and Sri Lanka (18%). Recently, Pakistan's coalition government proposed the idea of imposing a Reformed General Sales tax which was modelled along the lines of VAT. However, with the war on terror having engulfed Pakistan's economy, the politically unpopular bill was not approved in the senate/parliament and has afforded some respite to the people of Pakistan who are already suffering from a stagnant economy and rampant inflation.Expenditures (and the economic costs of War on Terror)
Government expenditures were $25 billion (2006 est.)Pakistan has sustained immense socio-economic costs of being a partner in the international counter terrorism campaign. According to government estimates, the war on terror cost the Pakistani economy nearly US$8 billion a year in terms of lost exports, foreign investment, privatization, industrial output, tax collection (see table below for the government's estimation of the cost of ‘War on Terror’ to Pakistan as published in an IMF report).
{| class="wikitable"
|-
! (Rs billion) !! 2004/05 !! 2005/06 !! 2006/07 !! 2007/08 !! 2008/09
|-
| Direct Cost || 67.103 || 78.060 || 82.499 || 108.527 || 114.033
|-
| Indirect Cost* || 192.000 || 222.720 || 278.400 || 375.840 || 563.760
|-
| Total || 259.103 || 300.780 || 360.899 || 484.367 || 677.793
|}
'*On account of loss of exports, foreign investment, privatization, industrial output, tax collection, etc.
According to the IMF, the anti-terrorist campaign following the 9/11 attacks in the United States strained Pakistan’s budget, as allocations for law enforcement agencies had to be increased significantly, eroding resources for development in the country. In addition to human sufferings and resettlement costs, development projects are afflicted with delays which ultimately resulted in large cost over-runs. The heightened sense of uncertainty has contributed to capital flight and slowed down domestic economic activity, creating unease among foreign investors. There has also been massive unemployment in the terror-inflicted regions, as frequent bombings and worsening law and order situation have taken a toll on the socio-economic fabric of the country.
Sovereign bonds
Pakistan is expected to sell a dual-trancheTranche
In structured finance, a tranche is one of a number of related securities offered as part of the same transaction. The word tranche is French for slice, section, series, or portion, and is cognate to English trench . In the financial sense of the word, each bond is a different slice of the deal's...
sovereign bond worth $750 million on March 23, 2006 that analysts said should ensure a favorable reception in the bond market. The 10-year tranche would be $50000 million and the 30-year portion $250 million. Pricing is expected during New York trading hours on March 23, 2006. The sources said that the 10-year tranche was expected to be priced at around 100125%, while the longer-dated tranche was expected to be sold at around 70.875%, the top end of the indicative yield range of 3.75 to 10.875%.
The bonds, consisting of 10-year and 30-year tranches, had generated $1.5 billion in orders and a total size of as much as $1.25 billion had been anticipated for what is Pakistan’s third foray into the international debt market since 2004.
Government of Pakistan has been raising money from the international debt market from time to time.
Details of amount raised in various issues is as follows:
1999 - $6230 million
2004 - $5000 million @ 6.75%
2005 - $6000 million worth Islamic bonds
2007 - $ 7500 million @ 6.875% worth Euro Bonds which were highly over subscribed
Income distribution
- Gini Index: 41
- Household income or consumption by percentage share:
- lowest 10%: 4.1%
- highest 10%: 27.7% (1996)
- middle 10%: 10.5%
See also
By province and administrative unit:- Economy of Balochistan, PakistanEconomy of Balochistan, PakistanThe economy of Balochistan, one of the four provinces of Pakistan, is largely based upon the production of natural gas, coal and minerals. Agriculture and livestock also dominate the Baloch economy. Horticultural development is a fairly recent, yet growing phenomenon...
- Economy of the Federally Administered Tribal AreasEconomy of the Federally Administered Tribal AreasThe economy of the Federally Administered Tribal Areas is relatively underdeveloped compared to other provinces and administrative territories of Pakistan. The Federally Administered Tribal Areas are the most impoverished and least developed areas in the country...
- Economy of IslamabadEconomy of IslamabadIslamabad is the capital of Pakistan and a net contributor to the Pakistani economy. Whilst having only 0.8% of the country's population, it contributes 1% to the country's GDP. The Islamabad Stock Exchange, founded in 1989, is Pakistan's third largest stock exchange after Karachi Stock Exchange...
- Economy of Khyber PakhtunkhwaEconomy of Khyber PakhtunkhwaThe economy of Khyber Pakhtunkhwa, a province of Pakistan, is the 3rd largest in the country. Khyber Pakhtunkhwa's share of Pakistan's total GDP has historically comprised 10.5%, although the province accounts for 11.9% of Pakistan's total population, rendering it the second-poorest province after...
- Economy of Punjab, PakistanEconomy of Punjab, PakistanThe economy of Punjab, Pakistan is one that is largely based on agriculture and industry. Punjab is the largest province of Pakistan in terms of population, and also has the largest economy in the country compared to other provinces and administrative units. Punjab's economy has quadrupled since...
- Economy of SindhEconomy of SindhThe economy of Sindh is the 2nd largest of all the provinces in Pakistan. Much of Sindh's economy is influenced by the economy of Karachi, the capital of the province and also the largest city and economic capital of the country. Sindh remarkably has a high GDP per capita was $1,400 in 2010 which...
Other
- Ministry of Commerce (Pakistan)Ministry of Commerce (Pakistan)The Ministry of Commerce is headed by the Commerce Minister of Pakistan, who must be a member of Parliament of Pakistan.- State Life Insurance Corporation :State Life Insurance Corporation - See also :* Economy of Pakistan* Ministry of Finance...
- List of tariffs in Pakistan
- Ministry of Finance (Pakistan)
- Pakistan Board of InvestmentPakistan Board of InvestmentBoard of Investment is the investment promotion agency of Pakistan. The Board of Investment assists companies planning to invest in Pakistan or to expand their Pakistani operations. The Board of Investment is a member of the World Association of Investment Promotion Agencies .- History :The...
- Trading Corporation of PakistanTrading Corporation of PakistanThe Trading Corporation of Pakistan , part of the Government of Pakistan's Ministry of commerce, is responsible for export and import of commodities in Pakistan...
- Rice Export Association of PakistanRice Export Association of PakistanThe Rice Export Association of Pakistan , part of the Government of Pakistan's Ministry of commerce, is responsible for export and import of Rice in Pakistan. Rice Export Association of Pakistan issues tenders for export and import of Rice...
- Economy of the OIC
- Prize Bonds
- 2011 Pakistan federal budget2011 Pakistan federal budgetThe Pakistan federal budget of 2010-2011 has been prepared in accordance with thebudgeting and accounting classification system that has been approved bythe Government of Pakistan as an integral part of the New AccountingModel....
- Economic history of PakistanEconomic history of PakistanThe economic history of Pakistan begins with the country's independence in 1947. The economy of Pakistan is a semi-industrialised one, based heavily on textiles, agriculture and food production, though recent years have seen a surge towards technological diversification...
- Science and technology in PakistanScience and technology in PakistanIn Pakistan, science and technology served as an important part of national politics, practices, and extreme national identities. From 1960s till the present, both science and technology were immediately linked to national ideology and practical functioning of Pakistan, notably the Pakistan Armed...
- Agriculture in PakistanAgriculture in PakistanPakistan's principal natural resources are arable land and water. About 25% of Pakistan's total land area is under cultivation and is watered by one of the largest irrigation systems in the world. Pakistan irrigates three times more acres than Russia...
- Industry of PakistanIndustry of PakistanPakistan ranks forty-first in the world and fifty-fifth worldwide in factory output.Pakistan's industrial sector accounts for about 24% of GDP. Cotton textile production and apparel manufacturing are Pakistan's largest industries, accounting for about 66% of the merchandise exports and almost 40%...
- Economic effects of 2010 Pakistan floods
- List of Pakistani Districts by Human Development Index
- List of Pakistani provinces by gross domestic product
- List of Pakistanis by net worth
Further reading
- Ahmad, Viqar and Rashid Amjad. 1986. The Management of Pakistan’s Economy, 1947-82. Karachi: Oxford University Press.
- Ali, Imran. 1997. ‘Telecommunications Development in Pakistan’, in E.M. Noam (ed.), Telecommunications in Western Asia and the Middle East. New York: Oxford University Press.
- Ali, Imran. 2001a. ‘The Historical Lineages of Poverty and Exclusion in Pakistan’. Paper presented at Conference on Realm, Society and Nation in South Asia. National University of Singapore.
- Ali, Imran. 2001b. ‘Business and Power in Pakistan’, in A.M. Weiss and S.Z. Gilani (eds), Power and Civil Society in Pakistan. Karachi: Oxford University Press.
- Ali, Imran. 2002. ‘Past and Present: The Making of the State in Pakistan’, in Imran Ali, S. Mumtaz and J.L. Racine (eds), Pakistan: The Contours of State and Society. Karachi: Oxford University Press.
- Ali, Imran, A. Hussain. 2002. Pakistan National Human Development Report. Islamabad: UNDP.
- Ali, Imran, S. Mumtaz and J.L. Racine (eds). 2002. Pakistan: The Contours of State and Society. Karachi: Oxford University Press.
- Amjad, Rashid. 1982. Private Industrial Investment in Pakistan, 1960-70. London: Cambridge University Press.
- Andrus, J.R. and A.F. Mohammed. 1958. The Economy of Pakistan. Stanford: Stanford University Press.
- Barrier, N.G. 1966. The Punjab Alienation of Land Bill of 1900. Durham, NC: Duke University South Asia Series.
- Jahan, Rounaq. 1972. Pakistan: Failure in National Integration. New York: Columbia University Press.
- Kessinger, T.G. 1974. Vilyatpur, 1848-1968. Berkeley and Los Angeles: University of California Press.
- Kochanek, S.A. 1983. Interest Groups and Development: Business and Politics in Pakistan. New Delhi: Oxford University Press.
- LaPorte, Jr, Robert and M.B. Ahmad. 1989. Public Enterprises in Pakistan. Boulder, Colorado: Westview Press.
- Latif, S.M. 1892. Lahore. Lahore: New Imperial Press, reprinted 1981, Lahore: Sandhu Printers.
- Low, D.A. (ed.). 1991. The Political Inheritance of Pakistan. London: Macmillan.
- Noman, Omar. 1988. The Political Economy of Pakistan. London: KPI.
- Papanek, G.F. 1967. Pakistan’s Development: Social Goals and Private Incentives. Cambridge, Massachusetts: Harvard University Press.
- Raychaudhuri, Tapan and Irfan Habib (eds). 1982. The Cambridge Economic History of India, 2 vols. Cambridge: Cambridge University Press
- White, L.J. 1974. Industrial Concentration and Economic Power. Princeton, N.J.: Princeton University Press.
- Ziring, Lawrence. 1980. Pakistan: The Enigma of Political Development. Boulder, Colorado: Folkestone.
- Ali, Imran. 1987. ‘Malign Growth? Agricultural Colonization and the Roots of Backwardness in the Punjab’, Past and Present, 114
- Ali, Imran. August 2002. ‘The Historical Lineages of Poverty and Exclusion in Pakistan’, South Asia, XXV(2).
- Ali, Imran and S. Mumtaz. 2002. ‘Understanding Pakistan—The Impact of Global, Regional, National and Local Interactions’, in Imran Ali, S. Mumtaz and J.L. Racine (eds), Pakistan: the Contours of State and Society. Karachi: Oxford University Press.
- Hasan, Parvez. 1998. Pakistan’s Economy at the Crossroads: Past Policies and Present Imperatives. Karachi: Oxford University Press.
- Hussain, Ishrat. 1999. Pakistan: The Economy of an Elitist State. Karachi: Oxford University Press.
- Khan, Shahrukh Rafi. 1999. Fifty Years of Pakistan’s Economy: Traditional Topics and Contemporary Concerns. Karachi: Oxford University Press.
- Kibria, Ghulam. 1999. Shattered Dream: Understanding Pakistan’s Development. Karachi: Oxford University Press.
- Kukreja, Veena. 2003. Contemporary Pakistan: Political Processes, Conflicts and Crises. New Delhi: Sage Publications.
- Zaidi, S. Akbar. 1999. Issues in Pakistan’s Economy. Karachi: Oxford University Press
- Faheem, Khan. 2010. Issues in Pakistan’s Economy. Peshawar:
External links
- Economic Pakistan
- South Asia Investor Review
- PakEconomics, an online resource for information on Pakistan's economy
- Statistics Division, Government of Pakistan
- Ministry of Finance, Government of Pakistan
- Ministry of Commerce, Government of Pakistan
- Board of Investment, Government of Pakistan
- Pakistan Economist Pakistan's leading Business & Economy Magazine
- BMA Capital Management Limited
- Pakistan B2B trade Portal Search for business in Pakistan
- Life Insurance Sector in Pakistan by Prof. Dr. Khawaja Amjad Saeed, FCMA
- United Nations Development Programme, Human Development Index
- The Economist's Pakistan Fact Sheet
- BBC Facts & Figures on Pakistan
- Global Economic Prospects: Growth Prospects for South Asia The World Bank, December 13, 2006
- The Economist: Recent Articles on Pakistan
- Pakistan: Economic Scenario 2008-2009