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Pakistan Economy Nears Historic Trillion Dollar PPP GDP Mark

Pakistan's PPP GDP is nearing trillion US$ mark in 2015, according to the latest figures available from the International Monetary Fund.

Nominal GDP based on current exchange rates is reported at $270 billion in 2015, up from $246 billion in 2014, an increase of $24 Billion.  Pakistan's per capita nominal GDP for 2015 is $1,427.085, up from $1,325.790 in 2014.

The nation's PPP GDP increased from $884 billion to $930 billion, an increase of $46 billion. Pakistan per capita PPP GDP is $4,902 for 2015, up from $4,749 in 2014, according to the IMF.

A dramatic decline in terrorist violence in Pakistan since the launch of Pakistan Army's Operation Zarb-e-Azb and a big drop in international oil prices have helped drive the country's economic recovery in recent months.

Among the clearest signs of recovery are increasing auto sales, growing smartphone purchases and cement consumption.

Pakistan auto industry is booming. Toyota, Suzuki and Honda factories are working around the clock in the southern port city of Karachi and eastern city of Lahore -- yet customers can still wait for up to four months for new vehicles to be delivered, according to media reports. At the same time, increased construction activity is visible everywhere in the country. First 5 months of the current fiscal year have seen sales of 93,570 cars, an increase of 66% over the same period last year.

Over 2 million 3G subscriptions and a corresponding number of smartphones are being bought every month in the country. More than half the people in Pakistan are expected to own a smartphone within the next few years.

Domestic cement sales have jumped by a phenomenal 16.89% to 4.29 million tons during July and August 2015 from 3.67 million tons shipped in the same period last year.

After its September meeting, the State Bank of Pakistan (SBP) said the rise in fixed investment financing in the energy generation and distribution, chemicals and services sectors signal possible increase in their productive activity in coming months. “The implementation of infrastructure development and energy projects under the China-Pakistan Economic Corridor (CPEC) will further enhance the improving investment environment. Therefore, there is anticipation of higher economic activity in 2015-16, which is expected to boost credit uptake,” it said.

Even as its economy recovers, it is unfortunate that Pakistan continues to lag behind its South Asian neighbors in human development.  The latest 2015 human development report from the United Nations Development Program (UNDP) shows that the country's leadership is continuing to fail its people, particularly the youth, by its lack of focus and underinvestment in education and health care sectors. There can be no sustainable economic growth without investing in human development. It requires immediate attention.

Related Links:

Haq's Musings

Pakistan Auto Industry

Record Cement Sales Raise Hope Of Pakistan Economic Recovery

Credit Suisse Bullish on Pakistan Cement Industry

China-Pakistan Economic Corridor

Pakistan Army Acts Against Terrorists

Pakistan Middle Class Larger & Richer Than India's

Top Global Investor Bullish on Pakistan

The Role of Cement Industry in Economic Development of Pakistan

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Comment by Riaz Haq on December 24, 2015 at 9:31am

#Pakistan infrastructure: #CPEC project with #China could boost Pakistan economy- Nikkei Asian Review

The China-Pakistan Economic Corridor initiative, a planned $46 billion network of transport links, appears to be gaining momentum, which is good news for Pakistan's sluggish economy. Still, security and funding issues remain an obstacle.

The CPEC project, agreed to by Chinese Prime Minister Li Keqiang and his Pakistani counterpart, Nawaz Sharif, in May 2013, would connect the Arabian Sea port of Gwadar in southwestern Pakistan with the Xinjiang region of northwestern China upon its scheduled completion in three years.

The corridor is part of China's "One Belt, One Road" initiative to establish a network of transcontinental land and sea routes. China views Gwadar as a potential hub for trade with the Middle East, Africa and Europe. The project is also aimed at promoting development in Xinjiang and Tibet.

Gwadar, a deep-sea port that is widely expected to become Pakistan's biggest, started container ship operations in May.

Claude Rakisits, senior fellow at the South Asia Center of U.S. think tank the Atlantic Council, said the project could be good for Afghanistan, too. "If peace eventually does come to Afghanistan, CPEC will help that country integrate more closely economically with Pakistan and Iran," he said. "And, of course, it will provide direct access to western China and its hinterland ... a vast and fast-growing region in need of development."

Added Rakisits, "Needless to say, with better roads and railroads, the huge Pakistan market will be easier to access for foreign investors."

Comment by Riaz Haq on December 30, 2015 at 10:35pm

SBP Report for 2015 as seen by economist Kamal Monnoo:

First, Growth: As per the report the real GDP growth rate for the FY 2015 was 4.20% with 2.90% coming from agriculture, 3.60% from industry and 5.0% from services. Clearly this 4.2 falls short of 5.20%, the benchmarked target, but then from government’s perspective its defence could be that this is a better showing than in FY 2013 — when they took over — and that it has performed well to put the growth back on an upward trajectory. In FY 2013 we witnessed a fall in growth to 3.70% from 3.80%, but thereon it has been rising, 4.0% in FY 2014 and now 4.20% in FY 2015. A reasonable argument, but the problem is that when we dissect this growth performance, a rather troubling picture emerges. Pakistan, a country with high mix of existing employable youth and a population growth rate that requires more than 200,000 new jobs a year, essentially needs to grow in sectors that optimise job creation, meaning industry and agriculture.

However, these are the very sectors where we either saw stagnation or a decline: growth rates in industry fell to 3.60% from 4.50% (a staggering 3.20% off the target) and in agriculture a marginal movement of +0.20% (but 0.40% off the target). Even worse, the decline in industry came largely on the back of falling exports (not ‘stagnating’ exports as being claimed in the report) and that too in textiles – the most labour intensive industrial sector. Exports from developing economies, as we know, basically capitalise on cheap labour to gain competitive edge in international markets, in turn directly touching the lives of low-wage labourers and serving the twin purpose of mass employment generation cum distribution of income to low-income strata.

The simultaneous erosion of industry and exports depicts a dangerous trend, which if not quickly arrested can lead to serious social unrest. Add to this the dismal performance of agriculture in 2015 — the largest employment providing sector — and the picture becomes even gloomier. The mess-up in agriculture actually makes up for a perfect storybook tale of corruption, incompetence and neglect, qualifying for criminal investigation. A story of greed of seed and insecticide/pesticide mafia resulting in devastating outcomes where nearly one third of Punjab’s cotton crop stands wiped out and its quality badly bruised, once robust fields of sugarcane now reduced to low yield harvests, and the image of legendary Pakistani Basmati rice seriously dented.

Second, Financial Industry, Debt and Credit-to-GDP ratio: This dodgy saga of underlying growth does not end at the poor showing of industry and agriculture, but also goes on to manifest itself in the services sector, which presumably in 2015 has been the economy’s engine of growth. The services sector grew by 5%, up 0.60% from the previous year and with it taking the overall growth to a respectable level. But then again, scratch the surface and beneath it one finds the malaise of our banking and financial industry. Its growth mainly came on the back of governmental services, finance (debt) to the government, and insurance that also primarily catered to governmental borrowings. Nearly 1.90% out of the 4.20% GDP growth or 75% of the service-sector’s growth can be attributed merely to the government. And this policy of high state loans from commercial bank — in the process crowding-out the private sector — by itself is very counterproductive since in essence capital flows away from the efficient user (private sector) to the less efficient user (government). Moreover, it retards investment, employment generation, and creates an incremental debt in the economy, which otherwise could have been avoided. 

Comment by Riaz Haq on January 26, 2016 at 10:31am

#Pakistan plans its first mega nuclear 2000 MW power plant - The Economic Times 
Energy-starved Pakistan will set up a mega nuclear power plant with power generation capacity of 2,000 megawatts, the first in the country's history.

"It will be the first time in the history of the country that a mega nuclear power plant would be set up with power generation capacity of 2,000 megawatts," Minister for Planning and Development Ahsan Iqbal said today.

Iqbal said that Thar is enriched with natural coal deposits and the government is committed to utilising the res .. 

"Super critical technology will be used in the coal power plant, which will be established with the financing of the Asian Development Bank in Jamshoro to ensure a safe environment," he was quoted as saying by the Radio Pakistan.

Pakistan faces about 5,000 MW energy shortages and the government has launched several projects to bridge the gap.

Comment by Riaz Haq on September 6, 2016 at 4:12pm

Pakistan PPP GDP has increased 4.5X since 1990 in terms of current international dollar, according to the World Bank:

1990 GDP $212 billion

2016 GDP $952 billion (IMF puts it at $982 billion)

The Geary–Khamis dollar, more commonly known as the international dollar (Int'l. dollar or Intl. dollar, abbreviation: Int'l.$ or Intl.$), is a hypothetical unit of currency that has the same purchasing power parity that the U.S. dollar had in the United States at a given point in time. It is widely used in economics.

Comment by Riaz Haq on March 18, 2017 at 12:54pm

IMF estimates Pakistan's per capita income at Intl$ 5,402.8 (2017, estimate), putting the country's PPP GDP at more than a trillion dollars.

It has risen from 0.56% of the global GDP in 1980 to 0.81% in 2017.

It's currently ranked as the 24th largest economy in the world. PwC forecasts it to rise to the 20th largest by 2030 and 16th largest by 2050, overtaking Italy, Canada and South Korea.

Comment by Riaz Haq on May 16, 2017 at 11:02am

IMF estimates that Pakistan's PPP GDP crossed the trillion dollar mark in 2017. 

Intl$ 1,059.9 billion (2017, estimate)


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