Pintu
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As per advice from Riteshji, I am starting this new thread on the comaparison of the economic situation of our two sub continental neighbours, with whom we were united geographically till 63 years ago.
First to start up with Pakistan :
Pakistan is 26th largest economy in terms of PPP , 47th largest in terms of US Dollar, Pakistan's economy mainly comprises of chemicals , Textiles , food processing and other industries. However , the liberalised economy of Pakistan greatly sufferred by the ongoing Political disturbances, mixed levels of Foreign Investment and most particularly Military conflict with India in 1999 and Pakistan's choice of Arms procurement to 'Match India' had its straining effect on the troubled Economy. Though Pakistan declared top performer of the region by IMF in 2005, impressed by the Performance of Gen. Musharraf Regime in reformist policy, massive earthquake in 2005 though manageable took some toll on the economy.
Pakistan raised its developmental spendings in FY 07 by 52% , however inflation remains a biggest threat to country's economy currently in double digit figure , please see: Inflation Rate of Pakistan | Ministry of Finance,
as I quote :
(Exchange Rates) as on 1.8.2009.
What is more concerning for the economists, the S&P downgraded Pakistan's rank in foreign currency debt from B to CCC+ only several notches ahead being declared in default and investors confidence is low therein.
However, coming years may be less turbulant for Pakistan as EIU predicts inflation backs to single digit figure in 2010, and economic growth may be on 7%.
Pakistan was a very poor and predominantly agricultural country when it gained independence in 1947 from British occupied India. Pakistan's average economic growth rate since independence has been higher than the average growth rate of the world economy during the period. Average annual real GDP Decay 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.
As Wikipedia tells us :
Doing Business
The World Bank (WB) and International Finance Corporation’s flagship report ‘Ease of Doing Business 2009’ ranked Pakistan 77 among 181 countries around the globe. Pakistan comes second in South Asia behind Maldives at 69th place, leaving India behind at 122. The top five countries are Singapore, New Zealand, the United States, Hong Kong and Denmark. (Source : Wikipedia)
Stock market
Main article: Karachi Stock Exchange
In the first four years of the twenty-first century, Pakistan's KSE 100 Index 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. [8]. 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 significance in recent times.
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 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.
Growing middle class
Measured by purchasing power, Pakistan has a 30 million strong middle class, according to Dr. Ishrat Husain, Ex-Governor (2 December 1999 - 1 December 2005) of the State Bank of Pakistan. It is a figure that correlates with research by Standard Chartered Bank which estimates that Pakistan possesses a "a middle class of 30 million people that Standard Chartered estimates now earn an average of about $10,000 a year."Latest figures put Pakistan's Middle Class at 35 million strong. In addition, Pakistan has a growing upper & upper middle class, estimated at 6.8 million in 2002 and projected to grow to 17 million people by the year 2010, with relatively high per capita incomes.
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".
Demographics
With a per capita GDP 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 49% 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 studyconcluded 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.
-----------------------------------------To be continued----------------------------------------------------------------
First to start up with Pakistan :
Economy of Pakistan
Pakistan is 26th largest economy in terms of PPP , 47th largest in terms of US Dollar, Pakistan's economy mainly comprises of chemicals , Textiles , food processing and other industries. However , the liberalised economy of Pakistan greatly sufferred by the ongoing Political disturbances, mixed levels of Foreign Investment and most particularly Military conflict with India in 1999 and Pakistan's choice of Arms procurement to 'Match India' had its straining effect on the troubled Economy. Though Pakistan declared top performer of the region by IMF in 2005, impressed by the Performance of Gen. Musharraf Regime in reformist policy, massive earthquake in 2005 though manageable took some toll on the economy.
Pakistan raised its developmental spendings in FY 07 by 52% , however inflation remains a biggest threat to country's economy currently in double digit figure , please see: Inflation Rate of Pakistan | Ministry of Finance,
as I quote :
The recent instability in Pakistan cost Paksitan dearly in FDI which dropped from $ 8 bn to $ 3.5 bn in current fiscal, and FDI out flown to Gulf countries, a widening trade deficit , inflaton and crash of Pakistani Rupee seen the exchange rate 82.8 Pk Rupee = 1 US $Inflation Rate of Pakistan | Ministry of Finance
Inflation Rate of Pakistan
In sheer contrast to significant abatement in the inflationary pressures across the globe, the inflation in Pakistan has depicted downward rigidity. All price indices like CPI, WPI and SPI witnessed a clear downtrend in recent months. The inflation rate as measured by the changes in Consumer Price Index (CPI) after reaching peak at 25.3 percent in August 2008, showing easing since November 2008 but bounced back to 21.1 percent in February 2009 mainly because of spike in the prices of some food items like onion, chicken farm, sugar etc. WPI inflation is following international declining trend but non-food component of the CPI showed some stubbornness till February 2009. The CPI inflation averaged 23.5 percent in July-February 2008-09 as against 8.9 percent in the comparable period of last year
(Exchange Rates) as on 1.8.2009.
What is more concerning for the economists, the S&P downgraded Pakistan's rank in foreign currency debt from B to CCC+ only several notches ahead being declared in default and investors confidence is low therein.
However, coming years may be less turbulant for Pakistan as EIU predicts inflation backs to single digit figure in 2010, and economic growth may be on 7%.
Pakistan was a very poor and predominantly agricultural country when it gained independence in 1947 from British occupied India. Pakistan's average economic growth rate since independence has been higher than the average growth rate of the world economy during the period. Average annual real GDP Decay 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.
(Wikipeda)Industrial-sector growth, including manufacturing, was also above average. In the late 1960s Pakistan was seen as a model of economic development around the world, and there was much praise for its economic progression. 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 1990s. Two wars with India in Second Kashmir War 1965 and Bangladesh Liberation War 1971 and separation of Bangladesh adversely affected economic growth
In particular, the latter war brought the economy close to recession, although economic output rebounded sharply until the nationalizations of the mid-1970s. 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.
As Wikipedia tells us :
Economy of Pakistan remained to be resilent.Economic resilience
GDP Rate of Growth 1951-2007
Historically, Pakistan's overall economic output (GDP) 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 an eight-year period —
* the Asian financial crisis;
* economic sanctions — according to Colin Powell, Pakistan was "sanctioned to the eyeballs";
* lop recession;
* severe rioting in the port city of Karachi;
* a severe drought — 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 military actions against militants in parts of the 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.
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."
Doing Business
The World Bank (WB) and International Finance Corporation’s flagship report ‘Ease of Doing Business 2009’ ranked Pakistan 77 among 181 countries around the globe. Pakistan comes second in South Asia behind Maldives at 69th place, leaving India behind at 122. The top five countries are Singapore, New Zealand, the United States, Hong Kong and Denmark. (Source : Wikipedia)
Stock market
Main article: Karachi Stock Exchange
In the first four years of the twenty-first century, Pakistan's KSE 100 Index 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. [8]. 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 significance in recent times.
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 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.
Growing middle class
Measured by purchasing power, Pakistan has a 30 million strong middle class, according to Dr. Ishrat Husain, Ex-Governor (2 December 1999 - 1 December 2005) of the State Bank of Pakistan. It is a figure that correlates with research by Standard Chartered Bank which estimates that Pakistan possesses a "a middle class of 30 million people that Standard Chartered estimates now earn an average of about $10,000 a year."Latest figures put Pakistan's Middle Class at 35 million strong. In addition, Pakistan has a growing upper & upper middle class, estimated at 6.8 million in 2002 and projected to grow to 17 million people by the year 2010, with relatively high per capita incomes.
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".
Demographics
With a per capita GDP 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 49% 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 studyconcluded 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.
-----------------------------------------To be continued----------------------------------------------------------------