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 (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
| 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 |
Read more about this topic: Economy Of Pakistan
Famous quotes containing the words economy and/or today:
“Cities need old buildings so badly it is probably impossible for vigorous streets and districts to grow without them.... for really new ideas of any kind—no matter how ultimately profitable or otherwise successful some of them might prove to be—there is no leeway for such chancy trial, error and experimentation in the high-overhead economy of new construction. Old ideas can sometimes use new buildings. New ideas must use old buildings.”
—Jane Jacobs (b. 1916)
“Whether we regard the Women’s Liberation movement as a serious threat, a passing convulsion, or a fashionable idiocy, it is a movement that mounts an attack on practically everything that women value today and introduces the language and sentiments of political confrontation into the area of personal relationships.”
—Arianna Stassinopoulos (b. 1950)