Pakistan's Declining Economy Since 2008

[dvk1982]

Rebasing was done in this time period.

then u can't take pride on that becoz u underestimated earlier periods and becoz of which current periods get the kick...

 

[RiazHaq]

Fair source Riaz. Apologies for doubting the source earlier.. However, any thoughts on how come these numbers are different from the CIA fact book, google and world bank numbers with such a large margin..

There is a range of estimates for Pak GDP from difference sources: IMF, WB, and CIA World Facts.

The range nominal GDP (not PPP) for Pak that I see is from about $165 billion to $168 billion as published in 2008 for fiscal 2007-2008.

http://en.wikipedia.org/wiki/List_of_countries_by_GDP_(nominal)

 

[RiazHaq]

Pakistan and BD economy are similar in nature. Both the countries produce similar products, export similar and import similar and almost of the same volume. Also economic backgrounds are similar. Why PK failed to sustain global fallout and BD just shown resillience? Why change of government in Pakistan have any impact on economic growth while in BD it has very or no impact at all. Why in a fine morning we see PK is growing 8% per anum but by nighfall it gone negative when BD keeps it slow and steady and increasing every year. When BD projects to get its growth rate to 8% by year 2013 and 10% by year 2017 by attaining certain parameters when PK has no direction at all and dont know what will take them out of this difficult situation. Should they learn something from their smaller brother the way PK's president learned to say "No aid but trade" from BD?

Bangladesh's economy is about half the size of Pakistan's.

http://en.wikipedia.org/wiki/List_of_countries_by_GDP_(nominal)

But your point about the sudden change of fortunes is fair, and I think it's explained by Dr. Ashfaque Khan as follows:

Despite peaceful election and a smooth transition to a new government, political instability persisted. For a protracted period there were no finance, commerce, petroleum and natural resources and health ministers in the country. The government lost six precious months in finding its feet. It gave the impression of having little sense of direction and purpose. A crisis of confidence intensified as investors and development partners started to walk away. The stock market nosedived, capital flight set in, foreign exchange reserves plummeted and the Pakistani rupee lost one-third of its value. In short, Pakistan's macroeconomic vulnerability had grown unbearable. It had no option but to return to the IMF for a bailout package. There were no Plan A, B and C. There was only one plan, that is, to return to the IMF.

While the country was moving rapidly towards the IMF, the ministry of finance had prepared the plan to bring $4 billion by June 30, 2008 through four transactions. A kick-off meeting was scheduled on April 23, 2008 at the ministry to give a final touch to the various roadshows. These transactions were canceled on April 20, 2008. Who ordered the cancellation of $4 billion transaction? This cancellation prompted balance of payment crisis and the rest became history.


Haq's Musings: Pakistan's Economic Performance 2008-2010

 

[TechLahore]

India has moved away from being helplessly dependent on aid (as in late 80's and early 90s) and is slowly moving into the zone of providing some financial help to its friendly nations.

Well, in that case, Pakistan is doing the same... this is meaningless until net contributions are +ve. On these grounds, I disagree with your claim. If you get 100 and give 15, that really doesn't qualify as "moving into the zone of providing some financial help..."

In January 2009, India completed construction of the Zaranj-Delaram highway in southwest Afghanistan near the Iranian border; it is building Afghanistan's new parliament building set for completion by ...
But I guess you already knew this and the statement was just to poke a little..

Is there a link that shows the breakdown? Curious to see how much of the $1.5B is actually at work, vs. committed conversationally.

btw the $ 500 million you talked off is for the govt /people of Afg or the funding towards helping Afghan Taliban to overthrow the current govt??

Believe me, if we had given $500M to the Taliban, you would have been the first to find out. And the discovery wouldn't have been pleasant. So no, unless you see Mullah Omer waving a Taliban flag over the Red Fort, you can rest assured we didn't arm them with $500M.

No I am not contending that at all. The topic is on the amount of aid recvd. So if you open the links I provided in my post in response to

It seemed that way from your earlier post, but thanks for the clarification.

And the state of economy of pakistan today is fairly visible to all...

Yes, you are right. It is. And most of your assertions regarding increase in aid and inflation basically have to do with the same two year period that I was earlier alluding to. It is quite disingenuous to build a long term economic performance argument on two out-lier years. But that said, here is the CURRENT situation:

1. Inflation down to 10% Pakistan inflation rate averaged at 10.8 % during seven months

2. IMF says Pakistan has turned the corner, with large scale manufacturing showing growth, credit creation showing growth and a significant improvement in reserves

Pakistan economy is picking up: IMF - GEO.tv

3. Last IMF tranche done - WoT related costs pegged at 5% of GDP. Consider then, what real growth was this past year... 2.x% + 5%. The WoT costs will come down quickly as major action in SWA, Swat etc. has concluded.

IMF okays release of $1.2b last tranche

4. Pakistan poised to "catch a growth rate of 8 percent": IMF Official

Business Recorder [Pakistan's First Financial Daily]

It wasnt me who started contending that the growth of India is due to aid from rest of the world.. Think it was you..And if you try

And I stand by it. If it weren't for the aid supplied to India through much of its history, there would have been millions of deaths, much less poorer growth. Food aid has been critical to India through its history.

and highlight selective areas of affluence in Pakistan, then dont forget that india is 3rd in the world in terms of no of billionnairs.

I am not highlighting "selective areas affluence"; I think a city with a population > 1 million people involves pretty much the entire spread of services a government is supposed to deliver its people. I asked you if you can name a single Indian city which is even remotely comparable to Islamabad. And you can't. Because there isn't.

Yes, I concede that with a population 7-8 times Pakistan's, there are more billionaires in India than in Pakistan. But for almost the entire 63 year period, the per capita income of Pakistan has also been higher than that of India.

And roads are not the only component of infrastructure. Will do you well to comapre the reach of Indian railway network to what you see in pakistan...Also do look up some of the recent World economic forum reports on both India and Pakistan to get a perspective..

Pakistan Railways needs improvement, which is why we have launched a $20B project with Iran and Turkey to build an Islamabad to EU service utilizing lines in Pakistan, Iran and Turkey. Our links with China are also being upgraded. However, you may not know that during President Zia's tenure it was deliberately decided that the highway network would be given preference to rail and for this purpose, he had the NLC established for heavy transport. A similar decision was made by the US, by the way, which has a road network far more impressive in comparison to its railway network.

Yes, we can both read WEF reports and lots of other material, but at the end of the day, the proof of the pudding lies in its eating... Karachi has a population about the same as Bombay's, and both cities are economic hubs for their respective countries. Look at the infrastructure that's been developed in Karachi over the last decade alone. Look at the parks, highways, water treatment plants etc. Then look at the size of slums in both cities. One guess as to which city has the larger slums. Every single Pakistani I know that has visited India (Delhi, Bombay etc.) has come back with the view that the infrastructure in Lahore, Karachi, Islamabad, Faisalabad (collectively home to almost 30% of our population) is decades ahead of India.

I personally hosted a VP of the third largest PC manufacturer in the world in Lahore just a couple of years ago. This gentleman (American) had visited India three times and had been to Mumbai, Bangalore, Hyderabad and Delhi. I took him to Bhurban, Lahore, Islamabad and Karachi. Other than Lahore-Karachi stretch, which was too long to drive, all our travels were by car. His exact quote to me was that he thought "Pakistan's infrastructure was 30 years ahead of India". Not my words.

If you want to argue for the sake of arguing, you are welcome to. My point - and one that has been validated by numerous uninterested third-parties such as William Dalrymple - is that over the past 63 years, Pakistan has on average, done better by its people than India in terms of standards of living. That, considered on the whole, the infrastructure in Pakistan is far better than India's. Yes, our economy has been hit hard these past two years due to a WoT which consumed 5% of our GDP growth and a global recession which put mighty economies like the US on a negative growth rate... we were still over 2%. But things have improved as per the data I have provided above and even as per the IMF the future is looking bright with a potential to re-enter the 6-8% growth range.

 

[Gin ka Pakistan]

Lack of electric power is also one reason for low productivity plus high cost of fuel and electricity (taking away of all the subsidy) increased production cost, according to demand of IMF for loans.

 

[BATMAN]

Every single Pakistani I know that has visited India (Delhi, Bombay etc.) has come back with the view that the infrastructure in Lahore, Karachi, Islamabad, Faisalabad (collectively home to almost 30% of our population) is decades ahead of India.

Before 9/11 indian infrastructure was 1/10 of where it stands today.
I have seen india before 9/11 the bombay airport was a shithole as compare to Karachi airport.

 

[Omar1984]

Before 9/11 indian infrastructure was 1/10 of where it stands today.
I have seen india before 9/11 the bombay airport was a shithole as compare to Karachi airport.

The war in neighbouring Afghanistan caused an economic catastrophe for Pakistan and then we had to deal with a new headache ttp and suicide bombings that never existed in Pakistan's soil before 9/11.

India shares no border with Afghanistan and is no where near the war torn country where troops from 20 different countries are fighting so it shouldn't compare the economic situation of Pakistan with India. Before 2001, Pakistan was doing better than india and we should see better days for Pakistan again after this war OF terror ends.

 

[sparklingway]

The farce that has been thrown to the average man over the past decade is that "new wide roads = development". People seem to believe that fly overs, underpasses and wide roads somehow exemplify "development". Any student of urban planning will contend this viewpoint and would know that if a stretch o road has to widened more than 3 times in a single decade this exemplifies the failure of urban planning and traffic flow management in the area. Ahmed Rafay Alam has written much about it in The News.

As for Indian roads, I have been to India (2005) and frankly they are incomparable with Pakistani roads and our highway infrastructure. Across much of western India, highways were in depleted condition with urban roads hardly accommodating anybody.

 

[BATMAN]

^^ Perhaps you are an exception, but wait you visited 5 years ago and that is post 9/11 period.
All i know about india is people shiting in open... while others are sleeping next to it.

Where as i agree to your point... when a road is getting widened it in one decade it is wrong but this is due to politicians dictating matters.

 

[sparklingway]

All i know about india is people shiting in open... while others are sleeping next to it.

Have you been there? Have you seen it? Have you got documented proof?

This is highly ethically unsound and immoral of you to make such claims. Control your language.

Where as i agree to your point... when a road is getting widened it in one decade it is wrong but this is due to politicians dictating matters.

Where the hell did politicians come from here? Urban planning is managed by bureaucrats not politicians. Lame finger pointing again.

 

[sab]

Have you been there? Have you seen it? Have you got documented proof?

This is highly ethically unsound and immoral of you to make such claims. Control your language.



Where the hell did politicians come from here? Urban planning is managed by bureaucrats not politicians. Lame finger pointing again.

No, Batman is right. It is shameful to admit but there are poor people of our quota without proper housing or latrins. It is very common in morning to see people shitting on rail-lines. But men sleeping next to him is his imagination.

Our problem is uneven development and job opportunity in different regions of the country. While Bihar is blessed with so much natural resources, it has fallen much behind Maharastra, Gujrat or karnataka. Thousands of people stream in to the metroes like Kolkata or Mumbai for better earning making it impossible to maintain everything in order. Batman Sir, if you see any Bihari or anyone from UP shitting on railway track in Mumbai, dont try to speculate whether he is rich or poor (of course you can question his civic sense). He may be living in a 10*10 ft room with four more cousines, but he has enough land,cattles in his native place and noway he is defined as a poor man.

I dont want to discuss the trait of Indians from different provinces, that might hurt my countrymen (if anybody present from those provinces), I just can tell you people from some provinces look poorer in appearence than people from other areas.

(Sorry for off-topic post)

 

[RiazHaq]

The farce that has been thrown to the average man over the past decade is that "new wide roads = development". People seem to believe that fly overs, underpasses and wide roads somehow exemplify "development". Any student of urban planning will contend this viewpoint and would know that if a stretch o road has to widened more than 3 times in a single decade this exemplifies the failure of urban planning and traffic flow management in the area. Ahmed Rafay Alam has written much about it in The News.

As for Indian roads, I have been to India (2005) and frankly they are incomparable with Pakistani roads and our highway infrastructure. Across much of western India, highways were in depleted condition with urban roads hardly accommodating anybody.

Your quibble with inadequate planning is justified, but infrastructure construction DOES EQUAL development anywhere, including the United States. Not only do contruction projects create a large number of jobs to stimulate the economy, such projects also increase productivity by reducing the time required for transportation of goods and people.

I agree with your comment on the shabby state of Indian roads based on my first hand experience of traveling there by road.

As to open defecation in India, it's not just ancedotal. A joint UNICEF-WHO study has confirmed that two-thirds of the people in India lack access to basic toilet facilities. They are forced to defecate in the open.

Haq's Musings: Fixing Sanitation Crisis in India

 

[karan.1970]

Well, in that case, Pakistan is doing the same... this is meaningless until net contributions are +ve. On these grounds, I disagree with your claim. If you get 100 and give 15, that really doesn't qualify as "moving into the zone of providing some financial help..."

It does if the 100 is on the downward trend and 15 is on the upward. If 10 years back you were getting 120 and giving out nothing and now you are getting 100 and giving out 15, the trend is quite clear...No where I am claiming that India has become totally free of receiving aid. But 2.2 billion development aid (over and above the military aid) for an economy of 168 billion is significantly higher than a 1.2 billion aid for a $ 1.3 trillion economy.. wouldnt you say ??

Is there a link that shows the breakdown? Curious to see how much of the $1.5B is actually at work, vs. committed conversationally.

Unfortunately No.

Believe me, if we had given $500M to the Taliban, you would have been the first to find out. And the discovery wouldn't have been pleasant. So no, unless you see Mullah Omer waving a Taliban flag over the Red Fort, you can rest assured we didn't arm them with $500M.

If it was possible for Pakistan to win India with just $500 million, It would have done that decades back. And your comment suggests the traditional Pakistani mindset of using terrorists to further strategic gains. And that's why you are fighting the war on terror and that's why your economy that was growing faster than India some years back is now is growing at an abysmal 2.5%

Yes, you are right. It is. And most of your assertions regarding increase in aid and inflation basically have to do with the same two year period that I was earlier alluding to. It is quite disingenuous to build a long term economic performance argument on two out-lier years. But that said, here is the CURRENT situation:

Not really..I have purposely shown numbers till 2007 which is before the eco crisis and before Pakistan's offensive on the western front. The 24% inflation was in 2001 and 14% in 2008

And I stand by it. If it weren't for the aid supplied to India through much of its history, there would have been millions of deaths, much less poorer growth. Food aid has been critical to India through its history.

And I never contended this. Yes India received a lot of aid over the years and Pakistan received more (proportionately by size). But India was able to utilize the aid much better to take its economy where it is today and Pakistan was not.

But then you can not talk about how India has grown because of aid in one post and then say that you dont care about it in the next..

I am not highlighting "selective areas affluence"; I think a city with a population > 1 million people involves pretty much the entire spread of services a government is supposed to deliver its people. I asked you if you can name a single Indian city which is even remotely comparable to Islamabad. And you can't. Because there isn't.

Since I havent seen Islamabad, I cant comment.. But one beautiful and well managed city is no indicator of economic growth..

Yes, I concede that with a population 7-8 times Pakistan's, there are more billionaires in India than in Pakistan. But for almost the entire 63 year period, the per capita income of Pakistan has also been higher than that of India.

You cant find solace in the population difference there as if population was the only reason, there should have been at least 7-8 times less number of billionairs in Pakistan, but it seems thats not the case..

List of countries by the number of US dollar billionaires - Wikipedia, the free encyclopedia

Pakistan Railways needs improvement, which is why we have launched a $20B project with Iran and Turkey to build an Islamabad to EU service utilizing lines in Pakistan, Iran and Turkey. Our links with China are also being upgraded. However, you may not know that during President Zia's tenure it was deliberately decided that the highway network would be given preference to rail and for this purpose, he had the NLC established for heavy transport. A similar decision was made by the US, by the way, which has a road network far more impressive in comparison to its railway network.

And that was exactly my point. Each country decides its own direction in transportation infrastructure. Paksitan went the raods way and India the way of Rail. So a comparision of roads of the 2 countries as an indicator of economic prowess is as fruitless as comparison of railways.

Yes, we can both read WEF reports and lots of other material, but at the end of the day, the proof of the pudding lies in its eating... Karachi has a population about the same as Bombay's, and both cities are economic hubs for their respective countries. Look at the infrastructure that's been developed in Karachi over the last decade alone. Look at the parks, highways, water treatment plants etc. Then look at the size of slums in both cities. One guess as to which city has the larger slums. Every single Pakistani I know that has visited India (Delhi, Bombay etc.) has come back with the view that the infrastructure in Lahore, Karachi, Islamabad, Faisalabad (collectively home to almost 30% of our population) is decades ahead of India.

I personally hosted a VP of the third largest PC manufacturer in the world in Lahore just a couple of years ago. This gentleman (American) had visited India three times and had been to Mumbai, Bangalore, Hyderabad and Delhi. I took him to Bhurban, Lahore, Islamabad and Karachi. Other than Lahore-Karachi stretch, which was too long to drive, all our travels were by car. His exact quote to me was that he thought "Pakistan's infrastructure was 30 years ahead of India". Not my words.

Infrastructure has been a weak point in the Indian growth story. In India we have grown despite our infra and not because of it. But now thats changing as well and the indian govt is waking up to that need. The bad state of Indian roads is being countered by an explosive growth in air travel options. Do you know, it costs INR 3000 for a ticket to Dubai from Delhi or Rs 4000 for a Delhi Bombay flight. And I am not even going into the bulk purchase discounts that most organizations use for frequent travellers. But at the end of the day, Infra is one of components of economic competitiveness. WEF lists 12 pillars (infra + 11 others)for global competitiveness and Pakistan is no where near India in either of those 12, including Infrastructure.. And I would take their research over words of an american company's VP's who would have a limited exposure at best.

If you want to argue for the sake of arguing, you are welcome to. My point - and one that has been validated by numerous uninterested third-parties such as William Dalrymple - is that over the past 63 years, Pakistan has on average, done better by its people than India in terms of standards of living. That, considered on the whole, the infrastructure in Pakistan is far better than India's. Yes, our economy has been hit hard these past two years due to a WoT which consumed 5% of our GDP growth and a global recession which put mighty economies like the US on a negative growth rate... we were still over 2%. But things have improved as per the data I have provided above and even as per the IMF the future is looking bright with a potential to re-enter the 6-8% growth range.

I dont debate that traditionally Pakistan has grown faster than India and that is exactly what i mentioned in my initial post in this thread. But then the recession has been there for India too. Isnt it?? The WOT is a fact and is a result of Pakistan's own policies so you can not look at your economy in isolation with WOT. I do hope the predictions of 6-8% growth for Pakistan come true as there is nothing better for India than a prospering and stable Pakistan. But in my view the WOT is far from over and there may be some more hurtful times ahead for Pakistan economy..

 

[karan.1970]

Before 9/11 indian infrastructure was 1/10 of where it stands today.
I have seen india before 9/11 the bombay airport was a shithole as compare to Karachi airport.

You are being irrational and naive at best if you think India can grow its infra 10 times in 10 years

 

[karan.1970]

Your quibble with inadequate planning is justified, but infrastructure construction DOES EQUAL development anywhere, including the United States. Not only do contruction projects create a large number of jobs to stimulate the economy, such projects also increase productivity by reducing the time required for transportation of goods and people.

Infra growth = Development ---YES
Roads(only) = Infra growth ---NO

check the WEF reports. India scores higher in business Infra than Pakistan despite its bad roads etc