Pakistan’s Economy: Challenges and Prospects

Topics: Macroeconomics, United States public debt, Economic growth Pages: 8 (1829 words) Published: June 27, 2013
PRESENTATION ON

Pakistan’s Economy: Challenges and Prospects
By Dr. Ashfaque H. Khan Principal & Dean NUST Business School B siness National University of Sciences & Technology, Islamabad.

At: The I i Th Institute of Chartered Accountants of Pakistan (ICAP) f Ch dA f P ki and CFO Conference 2012, Karachi, Marriott Hotel, March 28, 2012 0

Outline of the Presentation
E Economic C diti i Conditions i 1947 in  Ups and Downs In Pakistan’s Economy  Recent Challenges  Where are we today?  Pakistan’s Economy in the Next two years (2012 13 & Pakistan s (2012-13 2013-14)  Major Issues j  Way Forward

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What Kind of Challenges Faced by Pakistan in 1947

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 The influx of refugees from India created insurmountable problems as the country had no resources to meet this challenge  The migration of Hindu and Sikh communities from Pakistan nearly paralyzed the economic and administrative machinery.  The head office of only One Pakistani owned bank was located in Pakistani territory

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 The Karachi Port was underdeveloped and most of Pakistan’s trade routed through the Indian ports of Bombay and Calcutta  India refused to release allotted share of cash balance of undivided India to the tune of Rs 75 crore (Rs 750 million) for (Rs. running the civil administration.  After a long battle India released a much smaller amount than the legitimate share of Pakistan

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 The share of agriculture in GDP was 60% in 1947. Today, it contributes 22% and 78% contribution comes from industry and services  Production of wheat was 4.0 million tons in 1947. Today we are producing over 23-24 million tons - almost 6 times more  Production of cotton was approximately 1.0 million bales in 1947. Today we are producing close to 13.0 -14.0 million bales  Production of sugarcane was 10 million tons in 1947. Today we are producing over 55-60 million tons

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 Out of 14,569 industrial establishments in British India in 1947, only 1406 units (less than 10%) were located in the areas that comprised Pakistan Pakistan.  At the time of independence, Pakistan had a narrow industrial base with 34 units of textile, sugar mills and some cement textile factory  In 1947 there were 177,000 spindles in Pakistan. Today we have 9.3 million spindles. There were 4800 looms in 1947; today we have approximately 3 0 million power looms 3.0

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 Pakistan used to produce 35,000 tons of sugar and today we are producing more than 3.5-4.0 million tons of sugar  At the time of independence Pakistan was producing 270,000 tons of cement. Today we are now producing over 28 million y p g tons of cement  Pakistan inherited very weak infrastructure at the time of f f independence. Pakistan inherited 22,000 km road and today we have a road network of 258,350km

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Ups and Downs in Pakistan’s Economy
Real GDP Growth (%)
1950s 1960s 1970s 1980s 1990s 2000-01 2000 01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2.5% 6.8% 4.8% 4 8% 6.5% 4.6% 2.0% 2 0% 3.1% 4.7% 7.5% 9.0% 5.8% 6.8% 3.7% 1.7% 3.8% 2.4% 8 Source: Pakistan Economic Survey

10.00%

0.00% 9.00% 2.00% 3.00%

1.00%

4.00%

5.00%

7.00%

8.00%

6.00% 6 00%

195 50s 196 60s 197 70s 198 80s 199 90s 2000‐‐01 2001‐‐02 9

2.00%

GD P

2002‐‐03 2003‐‐04 2004‐‐05

Real GDP Growth (%)

9.00%

2005‐‐06 2006‐‐07 2007‐‐08 2008‐‐09
1.70%

2009 9‐10 2010 0‐11

Recent Challenges (Post – 2007/08)
– Food & Fuel Crisis (Common Challenges faced by every economy) – Intensification of War on Terror – Political Instability – Less than satisfactory security environment – Energy Crisis – Instability in economic team – Weak economic team – Fiscal Indiscipline – Weak governance – Break down of public–private sector relations

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Consequently
– Economic growth slowed to an average of 2.9% per annum – Investment is down to 37 years low at 13.4% of GDP – Large – scale manufacturing growth averaged 0.5% per annum Real GDP...
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