Stopping the rot: Economist

Just like the bad old days

BRIGHTLY painted Tata lorries, laden with sacks of onions, wait in the noon heat at the Wagah border post between India and Pakistan. Once past customs, the onions will go on to Lahore and beyond. But the lorries must turn back. Their produce is laboriously loaded onto smaller vans, driven by locals.

Pakistan's costly imports of food ($3.5 billion in the first ten months of this fiscal year, which ends on June 30th), fertiliser ($823m) and fuel (over $8.6 billion) may pull the economic rug from under its newly installed government, which presented its first budget, belatedly, on June 11th. The State Bank of Pakistan (SBP), the central bank, reckons the country's current-account deficit might reach 7.8% of GDP this fiscal year, its highest ever (see chart). Growth has slowed to 5.8%, inflation has quickened to over 19% and the government's budget deficit, at about 7% of GDP, is the highest in ten years.

Such macroeconomic disarray will be familiar to the coalition government led by the Pakistan People's Party of Asif Zardari, and to Nawaz Sharif, whose party provides it "outside support". Before Mr Sharif was ousted in 1999, the two parties had presided over a decade of corruption and mismanagement. But since then, as the IMF remarked in a report in January, there has been a transformation. Pakistan attracted over $5 billion in foreign direct investment in the 2006-07 fiscal year, ten times the figure of 2000-01. The government's debt fell from 68% of GDP in 2003-04 to less than 55% in 2006-07, and its foreign-exchange reserves reached $16.4 billion as recently as in October.

For more on this article, please click on the following link: Stopping the rot: Economist

Executive Summary of the Economic Survey of Pakistan 2007-2008: The News

Wednesday, June 11, 2008
ISLAMABAD: The government on Tuesday released the Economic Survey 2007-08. Following is the Executive Summary of the survey.

Growth and Investment

Pakistan’s economy has shown great resilience against internal and external shocks of very high intensity and grew robustly at 5.8 percent in 2007-08, as against 6.8 percent last year and this year’s target of 7.2 percent. The Commodity Producing Sector (CPS) registered a growth of 3.2 percent in 2007-08 as against 6.0 percent last year owing mainly to the lackluster performance of agriculture and manufacturing. While agriculture grew by 1.5 percent, the manufacturing sector posted a modest growth of 5.4 percent in 2007-08. The large scale manufacturing (LSM) sector witnessed a modest growth of 4.8 percent, down from 8.6 percent last year. The manufacturing sector has been hard hit by political instability, frequent eruptions of incidents detrimental to law and order and the acute energy shortages. In unison with increasing prices for fuel and energy, all these factors have caused slower growth in LSM. Growth in the small scale manufacturing sub-sector moderated to 7.5 percent in 2007-08 from 8.1 percent during 2006-07.

The poor show of the agriculture sector was the result of a sharp deceleration in the growth of the major crops sub-sector, which posted a negative growth of 3.0 percent in 2007-08 as against a healthy growth of 8.3 percent last year. Minor crops registered a growth of 4.9 percent as against the negative growth of 1.3 percent last year. Fishing and forestry exhibited robust growth of 3.8 percent and 11.0 percent, respectively.

The services sector has surpassed the growth target of 7.1 percent and grew by 8.2 percent in 2007-08 as against the actual achievement of 7.6 percent last year. The finance and insurance sector displayed a stellar growth performance of 17.0 percent during 2007-08 as against 15 percent last year. Value added in the wholesale and retail trade sector grew at 6.4 percent as compared to 5.4 percent last year and the target of 7.8 percent this year. The Transport, Storage and Communication sub-sector saw a deceleration in growth to 4.4 percent in 2007-08 as compared to 6.5 percent of last year.

For more on this article, please click on the following link: Executive Summary of the Economic Survey of Pakistan 2007-2008: The News

For more reports and economics articles visit : www.economistan.com