Thursday, December 28, 2006

The State of Pakistani Economy – It’s Time to Party

Pakistan has good reason to smile, though challenges remain

[By Mayank Austen Soofi]

Pakistan has reason to feel bright about 2007. The Economist magazine revised its 2006-07 gross domestic product (GDP) growth forecast for the country from 6.4% to 6.6%. In the previous year, the nation’s GDP had grown by over 8%.

According to Johan Wall, Country Director of World Bank in Pakistan, rapid growth has produced a sharp fall in poverty of 5%-10%, an increase in investment from 18% to over 20% of GDP. Not to be ignored is the great reduction in public debt from 85% of GDP in 1999-2000 to 55% at the start of 2006-07.

Both external and internal balances have strengthened, and reserves now cover five months of imports.

Tapping the Upturn

Expensive defense expenses notwithstanding, the government has used the resurge in economy in raising social and poverty-related expenditures from 3.8% in 2001-02 to 4.8% of GDP in 2004-05.

Under the leadership of Prime Minister Shaukat Aziz, a former Citibank Vice President, the government launched reforms to privatize public sector enterprises, liberalize external trade, and restructure the banking sector. For example, foreign investors are now permitted to own 100 percent of most businesses.

Roadblocks - The Poor and the Women of Pakistan

In spite of real successes, an average Pakistani could not be blamed for feeling far-off from the world of inflated statistics. According to the GDP, Pakistan’s per capita income comes to US$727. (Sri Lanka’s is US$1199). Poverty rates which had fallen substantially in the 1980s and early 1990s, have started rising again. The current inflation of 8% is still too high for the poor.

In addition, gender imparity continues to be Pakistan’s curse. Based on the Pakistan Social and Living Standards Measurement Survey (PSLSMS), literacy rates of population 10 years and older have increased to 53% as compared to 45% in 2001-02. But female and male literacy in 2004-05 stood at 57% and 80% respectively.

If the women are not provided with education, Pakistan can never become a developed economy.

What a Ride

It has been an astonishing journey. During the dawn of 21st century Pakistan’s economy had weakened to critical-level vulnerability. Worse, 2005 witnessed one of the deadliest earthquakes to hit the country. Everything else that was terrible, like the ongoing war on terrorism, was followed by big oil price hikes. Yet, the economy spiraled up. A miracle!

Time to do a Salsa, but forget not the problem areas, please.


Anonymous said...

its amazing turn around by the current goverment. kudos to them for doing a good job.

karachi wali said...

we keep talking about the warts in the society and often forget that certain good things are happening too. thanx for writing this piece..!