Economic and Social Survey of Asia 2008 launched

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Economic and Social Survey of Asia 2008 launched​

* The survey predicts economy to remain strong in 2008​

By Ijaz Kakakhel

ISLAMABAD: At launching the “Economic and Social Survey of Asia and the Pacific 2008” the renowned economist, Dr Sarfraz Khan Qureshi, on Thursday said the government has to curtail wasteful expenditures otherwise it would again fall in to clutches of the IMF and World Bank (WB).

The government has to reduce the budget deficit to the minimum level and the resources so saved should be diverted towards economic development of the country, he maintained. The United Nations Economic and Social Commission for Asia and the Pacific (ESCAP) launched its flagship publication today in more than 20 capitals in the region, and in New York and Geneva.

Director of the Innovative Development Strategies Sarfraz Khan Qureshi presented and explained salient features of the Survey.

Pakistan’s economy is expected to remain strong in 2008, growing at 6.5 percent, despite political uncertainties and disturbances, the ESCAP reported. Growth would be close to the 7 percent expansion recorded in 2007 and the 6.6 percent in 2006. The sustained growth also highlights the impact of economic reforms and policies over recent years. “In just a few years, sound macroeconomic policies have transformed Pakistan’s consumption-led growth impetus to one in which investment-led growth can assume a more important role,” ESCAP said.

In 2007, the agricultural sector recovered strongly, growing by 5 percent from just 1.6 percent in 2006, while the manufacturing sector’s growth continued at 8.4 percent in 2007, marginally down from the 10 percent recorded in 2006. A major driver of growth was investment. “In 2007, investment in real terms increased by over 20 percent,” ESCAP said.

While Pakistan’s inflation rate was 7.8 percent in 2007, the main concerns lay in higher food prices, which rose by 10.3 percent with its effect felt most strongly by people living on low and fixed incomes.” Inflation in 2008 is expected to remain high, close to last year’s levels.

“The inflation was fuelled by global increases in some commodity prices, higher utility tariffs, and by local supply- and demand-driven factors,” ESCAP said. They survey revealed development expenditure has been taking an increasing share of overall expenditure in recent years. But the central government’s budget deficit in 2007 has remained steady at 4.2 percent of GDP. Concerns were evident over a sharp slowing in the growth of Pakistan’s exports and imports in 2007. The rates of growth for exports fell 3.4 percent while for imports the growth rate dropped by 6.9 percent.

A widening trade deficit was partly covered by remittances from migrant workers, which in 2007 rose to a record amount of $5.5 billion. At the same time, the current account deficit is expected to further widen in 2008.

ESCAP says the current account deficit is to remain an issue for both Pakistan and other South Asian countries due to higher oil prices and the impact on the textiles trade with the lifting of quota restrictions on Chinese exports over 2008. “To reduce the risk of depending too heavily on a single sector, export diversification should remain an important part of government strategies,” ESCAP said.

ESCAP says that for most South Asian nations, including Pakistan, public debt remains a serious problem with domestic public debt now accounting for a larger component of total public debt. “In Pakistan, public debt growth during the 1990s was unprecedented. A credible debt reduction strategy and fast economic growth cut the public debt burden from 84 percent of GDP in 2000 to 57 percent by 2006,” ESCAP said.

Pakistan successfully reduced its external debt burden through rescheduling, a debt swap for social spending, debt cancellation and the prepayment of expensive debt. As a result the debt service ratio has declined substantially over the years 2000 to 2006 though some 30 percent of government revenues remain allocated to debt servicing.

The ESCAP noted that steps were needed by policy makers to contain public debt, especially promoting economic growth. Also, as budget deficits are a major cause of public debt, “every effort should be made to maintain a primary surplus in the budget.”

It also called for the strengthening of the tax administration, improving the efficiency of the tax systems including simpler tax systems, with fewer exemptions, less discretion and better compliance. Also, given the needs of the poor, “the challenge for governments is to contain wasteful public spending and orient it toward priority sectors,” ESCAP added.

ESCAP, in a wider view of the Asia Pacific region, said efforts to reduce poverty especially in the rural areas required the promotion of productivity in the agriculture sector. The policy focus needs to be on revitalising agriculture. This, ESCAP said, requires connecting the poor to markets through improvements to rural infrastructure, the availability and management of water, agricultural technology, increasing the capacity to adapt technologies and speeding up diversification and commercialisation.

ESCAP says improving land distribution and access to credit and extension are also important, as well as making macroeconomic policy “friendlier to agriculture, all enabling the poor to make a dent on poverty by themselves.”

This year’s issue marks the 60th anniversary of the Survey, first published in Shanghai in May 1948, which examines the most critical issues, challenges and risks in Asia and the Pacific in the months ahead, and explores critical long-term development issues relevant to all developing countries in the region.

Daily Times - Leading News Resource of Pakistan

 

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Economy likely to remain strong: Escap survey ​

ISLAMABAD (March 28 2008): Pakistan's economy is expected to remain strong in 2008, with 6.5 per cent growth despite political uncertainties and some other disturbances, the United Nations Economic and Social Commission for Asia and the Pacific (Escap) said on Thursday.

In its Economic and Social Survey of Asia and the Pacific 2008, which was launched at the United Nations Information Centre (UNIC) here, the Escap said the growth would be close to seven per cent as recorded in 2007 and the 6.6 per cent in 2006.

"In just a few years, sound macro-economic policies have transformed Pakistan's consumption-led growth to one in which investment-led growth can assume a more important role," said Innovative Development Strategies (IDS) Director Sarfraz Khan Qureshi, while commenting on the Escap survey.

In 2007, the agricultural sector recovered strongly, growing by five per cent from just 1.6 per cent in 2006, while the manufacturing sector's growth sustained at 8.4 per cent in 2007, marginally down from the 10 per cent recorded in 2006.

A major driver of growth was investment. Both domestic private and a record foreign direct investment (FDI), inflows doubled from 2006, touching 8.4 billion dollars last year, helped in boosting the economic performance. "In 2007, investment in real terms increased by over 20 per cent," the Escap said.

While Pakistan's inflation rate was 7.8 per cent in 2007, the main concern is higher food prices, which rose by 10.3 per cent with its effects felt most strongly by "people living on low and fixed incomes." Inflation in 2008 is expected to remain high, close to last year's level.

"The inflation was fuelled by global increases in some commodity prices, higher utility tariffs, and by local supply- and demand-driven factors," the Escap said, adding the government efforts to stem price hike included the expansion of the public sector utility stores network, even extending the programme of subsidies for essential edibles to rural areas.

The Escap said the government's expansionary fiscal policy was seeking to promote investment led growth and pro-poor spending, and added the development expenditure had been taking more share of overall expenditure in recent years. But the central government's budget deficit in 2007 had remained steady at 4.2 per cent of gross domestic product (GDP), it said.

Concerns were evident over a sharp slow down in the growth of Pakistan's exports and imports in 2007. The rates of growth for exports fell 3.4 per cent, while for imports the growth rate dropped by 6.9 per cent.

A widening trade deficit was partly covered by remittances from migrant workers, which in 2007 rose to a record amount of 5.5 billion dollars. At the same time, the current account deficit is expected to further widen in 2008.

The Escap said the current account deficit would remain an issue for both Pakistan and other South Asian countries due to higher oil prices and the impact on the garment and textile trade with the lifting of quota restrictions on Chinese exports over 2008. "To reduce the risk of depending too heavily on a single sector, export diversification should remain an important part of government strategies," the Escap said.

PUBLIC DEBT AND FISCAL DEFICITS: The Escap further said that for most South Asian nations, including Pakistan, public debt remains a serious problem with domestic public debt now accounting for a larger component of total.

"In Pakistan, public debt growth during the 1990s was unprecedented. A credible debt reduction strategy and fast economic growth cut the public debt burden from 84 per cent of GDP in 2000 to 57 per cent by 2006," the Escap said.

Pakistan successfully reduced its external debt burden through rescheduling, a debt swap for social spending, debt cancellation and the prepayment of expensive debt. As a result, the debt service ratio has declined substantially from 2000 to 2006 though some 30 per cent of government revenues were allocated for debt servicing. "An Escap Secretariat analysis shows a further 20 per cent decrease in public debt service to government revenue ratio could increase development spending by 24 per cent," it said.

AGRICULTURE'S REVITALISATION The Escap, in a wider view of the Asia Pacific region, said efforts to reduce poverty, especially in the rural areas, required the promotion of productivity in the agriculture sector. The rural poor accounted for some 70 per cent of the poor in the Asia-Pacific region.

"Agriculture appears to be neglected, even though it still provides jobs for 60 per cent of the working population and generates about a quarter of the region's gross GDP," the Escap said in its Survey.

"In South Asia, growth in agriculture dropped from 3.6 per cent in the 1980s to three per cent in 2002-2003," the Escap said, adding by raising the average agricultural productivity across the region some 218 million, a third of the region's poor, could be taken out of poverty bracket.

It also noted that "large gains in poverty are also possible through comprehensive liberalisation of global agricultural trade, which could lift a further 48 million people out of poverty net in the region."

Business Recorder [Pakistan's First Financial Daily]

 

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Escap sees mounting debt-servicing burden ​

ISLAMABAD (March 28 2008): The United Nations Economic and Social Commission for Asia and the Pacific (Escap) said on Thursday that Pakistan is likely to face higher external debt-servicing burden as repayments of the rescheduled non-ODA Paris Club stock has resumed in 2008.

The new government will have to approach the international donor agencies and lenders for loans, which are not likely to be available for Pakistan on soft terms, said Sarfraz Khan Qureshi, Director, Innovative Development Strategy (IDS), while explaining the salient features of the survey.

In the recent past it was said that Pakistan had broken the begging bowl, but the new government will again have to approach the international financial institutions (IFIs), Sarfraz told the ceremony, which was not attended by any government official.

Pakistan is also likely to shortly pay for foreign currency bonds as some of them are getting matured this year, said the survey, which could further tighten the situation for Pakistan. The survey says that both domestic and external public debt carry concerns of higher interest rates and lower private investment.

Pakistan debt growth over the 1990 was unprecedented, but a credible debt reduction strategy and faster economic growth reduced the public debt burden from 84 percent of the GDP in 2000 to 57 percent in 2006.

The survey gave an interesting account that reduction in debt to GDP ratio came by way of rescheduling, a debt swap for social spending, debt cancellation and pre-payment of GDP in 2005. Escap says that for most South Asian nations, including Pakistan, public debt remains a serious problem with domestic public debt now accounting for a larger component of total public debt.

As a result the debt service ratio has declined substantially over the years 2000 to 2006 though some 30 per cent of government revenues remain allocated to debt servicing. Escap says the reduction in public debt has enabled funds to be freed for development expenditures, from about two per cent of GDP in 2001 to about five per cent of GDP in recent years.

"An ESCAP Secretariat analysis shows a further 20 per cent decrease in public debt service to government revenue ratio could increase development spending by 24 per cent," it said. According to the survey, Asia-Pacific region heightened uncertainty over the credit crunch and US slowdown.

Survey notes that under a worst case scenario with the US falling into recession and a deeper depreciation of the dollar, the impact on much of the region will be harsh. However, the survey also opined that Asia-Pacific region's strong macro-economic fundamentals and underlying regional domestic demand will act as a vital buffer to any significant US downturn.

Business Recorder [Pakistan's First Financial Daily]

 

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Agri-trade will help achieve food security in SAARC
Tuesday, September 22, 2009 08:00 IST


Increased agricultural trade among South Asian countries is the answer to achieve food security in the region than initiatives like SAARC Food Bank, an Indian think-tank said. In a study titled "Food Security in South Asia: Issues and Opportunities," published by the Indian Council for Research on International Economic Relations (ICRIER), authors Surabhi Mittal and Deepti Sethi said regional trade among SAARC countries was at present impeded by fairly high tariff and non-tariff barriers.

"At the regional level, increased agricultural trade between South Asian countries will play a far more important role in achieving food security than initiatives like the setting up of the SAARC Food Bank, which is essentially a mechanism to handle emergency situations," the study said.

The study pointed out that South Asia, comprising Afghanistan, Bangladesh, Bhutan, India, Nepal, Pakistan, Sri Lanka, Maldives, has the highest number of people - 423 million -- living on less than a dollar a day. The region has the highest - 299 million -- undernourished and poor people and about 40% of the world's hungry.

Quoting estimates by the Food and Agricultural Organisation (FAO), the ICRIER study said "Asia will account for about half of the world's undernourished population, of which two-thirds will be from South Asia by 2010." Further, the authors have suggested that reduction of trade barriers, ensuring simultaneously that policies do not distort domestic incentive systems would go a long way in promoting regional agricultural trade.

"It is also important for South Asian countries to address the issue of speed and efficiency of food movements from surplus to deficit areas across the region, particularly in a crisis situation. This would require addressing issues regarding the efficiency of transportation and transportation infrastructure and the development of storage capacities within different countries," it said.

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