imran khan pak economy report 123

8/6/2019 Imran Khan Pak Economy Report 123

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PAKISTAN ECONOMY

IntroductionPakistan economic environment is affected by intensification of war on terror anddeepening of the global financial crisis which penetrated into domestic economy throughthe route of substantial decline in Pakistans exports and a visible slowdown in foreigndirect inflows. Pakistan economy continues to remain exposed to the vagaries of

international developments as well as internal security environment. The intensity of theglobal financial crisis has further added to Pakistan predicament. Despite support fromthe IMF and other bilateral and multilateral donors, Pakistan external account remainsexposed to a host of uncertainties.

Growth and investmentIn growth and in investment we lost investor because of global economic situation,through financial markets which collapse the external demand for its exports and declinein availability of external capital to finance or invest in growth process of the country.According to global financial crisis was felt on market and investor confidence in manydeveloping countries, including Pakistan, as banking systems and asset markets cameunder stress.

AgricultureIn spite of structural shift towards industrialization, agriculture sector is still the

largest sector of the economy with deep impact on socio-economic set up. It is the sourceof the livelihood of almost 44.7 percent of the total employed labor force in the country.With the present contribution to GDP at 21.8 percent,agriculture sector is the mainstay ofthe rural economy around which socio-economic privileges and deprivations resolve.


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ManufacturingThe manufacturing being the second largest sector of the economy bears significant

importance 18.4 percent contribution to GDP. Overall manufacturing sector posted anegative growth rate of 3.3 percent during the current fiscal year against the target of 6.1percent and 4.8 percent of last year. However, production in large scale manufacturingduring July-Mar 2008-09 witnessed a broad-based decline of 7.7 percent against therevised growth target of negative 5.0 percent.

InflationThe rate of inflation is an important macroeconomic indicator and one of the keyvariables most central banks around the world scrutinize when setting their main policyrate. Pakistan is one of only a handful of countries that is still experiencing double-digitinflation. The surge in food and commodity prices witnessed during the start of fiscal year2008-09 pushed the Consumer Prices Index (CPI) in Pakistan to a record level of 25.3percent in August 2008, remaining above the 20 percent level up until February 2009.Now a days its roundabout 18 percent.


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BANGLADESH ECONOMY

Some Consequences

1) In 1948 there were 11 textile mills in the East and only 9 in the West.

2) In 1971 there were 26 in the East as opposed to 150 in the West.

3) East Pakistan's economy transformed from a surplus one to a deficit one.

Virtual Bangladesh : Economy : Vital Statistics

Quality of Life Indicators

NamePopulati

on

Populati

on

Growth

Urban

Populati

on

Life

Expecta

ncy

Litera

cy

Peop

le

per

Doct

or

People

per

Telepho

ne

Peop

le

per

TV

Calori

e

Intak

e

Inf

Mo

Bangladesh 122.7 2.2% 21% 56 36.6% 12,500 380.0 170.5 2,100

Afghanist

an21.2 1.9% 19% 44 31.6% 7,358 390.0 114.4 1,710

Bhutan 0.7 2.3% 7% 49 40.9% 4,255 155.7 -- 2,058

India 928.6 2.1% 26% 61 52.1% 2,165 93.5 23.6 2,243

Maldives 0.2 3.0% 31% 64 92.6% 5,330 17.9 33.3 2,416


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Sri_Lanka 18.2 1.2% 22% 72 89.3% 5,888 88.1 19.2 2,286

Comparative Economics

Name

Per

Capita

GDP

(PPP)

GDP

(PPP)

Per

Capit

a

GNP

Reserv

es excl.

Gold

Curren

t AC

Balanc

e

GDP

Growt

h

Saving

s as %

of GDP

Export

s : 12

month

s

Inflati

on

(CPI)

Debt

Sri_Lanka $3,030 $53b. $635 $2.1b. -$0.6b. 5.7% 16% $3.6b. 11.2% $6.4b.

Maldives $1,373 $0.3b. $470 $0.04b. -$0.05b.

5.5% 11% $0.1b. 3.1% $0.1b.

Pakistan $2,235 $282b. $440 $2.3b. -$1.5b. 4.7% 14% $7.8b. 8.9%$26.1b

.

India $1,280$1,180

b.$310 $16.4b. -$2.7b. 5.3% 24% $26.2b. 8.2%

$85.2b

.

Banglade

sh$1,290 $151b. $220 $2.6b. $0.2b. 4.5% 7% $3.5b. 6.4%

$14.8b

.

Nepal $1,165 $25b. $180 $0.7b. -$0.3b. 7.0% 10% $0.4b. 8.2% $1.9b.

Afghanist

an$720 $14b. $150 $0.2b. -$0.1b. 2.0% 10% $1.0b. 56.7% $5.4b

Population: 164.7 million

GDP (PPP): $241.3 billion 5.4% growth 6.1% 5-year compound annual growth $1,465 per capita

Unemployment: 5.1%


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$716.0 million

INTRODUCTION

Bangladeshs economic freedom score is 53, making its economy the 130th freest in the2011 Index. Its overall score is 1.9 points better than last year, mainly reflecting

improvements in business freedom and investment freedom. Bangladesh is ranked 27th

out of 41 countries in the AsiaPacific region.

Bangladeshs economy remains overly dependent on agriculture, which accounts for

almost 20 percent of GDP and employs more than half of the labor force. State-ownedenterprises are a significant presence in most productive sectors, including those that are

usually dominated by the private sector in other economies.

Weak governance and structural problems continue to constrain Bangladeshs

development. The inefficient regulatory regime is often heavily politicized, and the

substantial presence of state-owned enterprises crowds out private investment.Corruption, coupled with onerous bureaucracy, is still perceived as pervasive, and the

underdeveloped financial sector impedes the growth of a more dynamic private sector.

BACKGROUND

After nearly two years of military-backed rule, the Peoples Republic of Bangladeshreturned to democracy in December 2008. The secular Awami League won over two-

thirds of the 300 parliamentary seats, reinstalling Sheikh Hasina Wajed as prime minister,

a post she had held from 19962001. Bangladesh is one of the worlds poorest and mostdensely populated nations, and the majority of its people work in agriculture, though

service industries now account for over half of GDP. Weak institutions, poverty, and

corruption undermine economic development and fuel social and political unrest despite

relatively large inflows of remittances and around $100 million a year in aid from the

United States. Sheikh Hasina faced the most serious challenge to her leadership inFebruary 2009 when a mutiny broke out within the Bangladesh Rifles, part of the armed

forces. Islamist extremist groups also threaten Bangladeshs democracy and pluralisttraditions, although the government has taken steps to curb their activities.

BUSINESS FREEDOMExisting commercial regulations are not enforced effectively. The entrepreneurial

environment is hampered by regulatory uncertainty that raises start-up and operational

costs. Other institutional weaknesses such as pervasive petty corruption continue to

impede private production and investment.

TRADE FREEDOMB l d h i ht d t iff t 11 t i 2007 I t d t
http://www.heritage.org/index/Business-Freedomhttp://www.heritage.org/index/Trade-Freedomhttp://www.heritage.org/index/Business-Freedomhttp://www.heritage.org/index/Trade-Freedom


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enforcement of intellectual property rights also add to the cost of trade. Twenty points

were deducted from Bangladeshs trade freedom score to account for non-tariff barriers.

FISCAL FREEDOMBangladesh has a moderate income tax rate and a high corporate tax rate. The top

income tax rate is 25 percent, and the top corporate tax rate is 45 percent. Other taxesinclude a value-added tax (VAT) and a tax on interest. In the most recent year, overall tax

revenue as a percentage of GDP was 8.8 percent.

GOVERNMENT SPENDINGIn the most recent year, total government expenditures, including consumption andtransfer payments, equaled 15.9 percent of GDP. Expenditures on welfare spending

increased as a response to the global crisis, but budget reallocation kept the total fiscal

stimulus relatively low. Underimplementation of the Annual Development Plan kept thefiscal balance steady despite revenue shortfalls. Cash flow from the treasury to

independent ministries is poorly managed.

MONETARY FREEDOMInflation is on pace to average 8 percent in 2010, compared with 5.4 percent in 2009,because of global commodity price increases. Subsidies and other government

assistance to agriculture have doubled since 2005. Public finances are further strained by

the governments determination to continue subsidies for electricity. Fifteen points werededucted from Bangladeshs monetary freedom score to account for measures that

distort domestic prices for petroleum products, some pharmaceuticals, and goods

produced in state-owned enterprises

GDP Projection

In the present GDP estimation exercise three types of growth scenarios have beendeveloped. First, the optimistic scenario is targeting 8% consistent annual growth of the

GDP; Second, the business as usual scenario implying steady 6% growth rate of the

GDP; and Finally, the base case scenario with 4% growth rate.
http://www.heritage.org/index/Fiscal-Freedomhttp://www.heritage.org/index/Government-Spendinghttp://www.heritage.org/index/Monetary-Freedomhttp://www.heritage.org/index/Fiscal-Freedomhttp://www.heritage.org/index/Government-Spendinghttp://www.heritage.org/index/Monetary-Freedom


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Year Projected GDP (million US$) at Projected Per Capita GDP (US$) at

4% GDP Growth 6% GDP Growth 8% GDP Growth 4% GDP Growth 6% GDP Growth 8% GDP Gr

FY2001(Actual) 46934 46934 46934 363 363

FY2002(IPRSP) 49186 49186 49186 375 375

FY2003 51154 52138 53121 385 392

FY2004 53200 55266 57371 394 410

FY2005 55328 58582 61961 404 428

FY2006 57541 62097 66918 415 448

FY2007 59843 65823 72271 426 468

FY2008 62237 69772 78053 437 490

FY2009 64726 73958 84297 449 513

FY2010 67315 78396 91041 461 537

FY2011 70008 83099 98324 474 562

FY2012 72808 88085 106190 487 589

FY2013 75720 93371 114685 500 617

FY2014 78749 98973 123860 514 646

FY2015 81899 104911 133769 529 677

FY2016 85175 111206 144470 544 710

FY2017 88582 117878 156028 560 745

FY2018 92125 124951 168510 576 781

FY2019 95810 132448 181991 593 820

FY2020 99643 140395 196550 611 860


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Bangladesh has made the first transition! That is, she has been able to

transform herself from a predominantly aid dependent country to a trade

dependent country. Now, the country is poised for the second transition!

That is, Bangladesh needs a steady growth based on foreign investment,

service income and trade. This will evidently require a breakthrough in the

performance of the external sector.


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PAKISTAN ECONOMY DEVELOPMENT

FINAL PROJECT

DIFFERENCE BETWEEN PAKISTAN AND

BANGLADESH ECONOMY

IMRAN KHAN

BBA VIII

THE UNIVERSITY OF LAHORE

ISLAMABAD

imran khan pak economy report 123

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