economy of paksitan:

The World Bank considers Pakistan a low-income country. GDP is around $166 billion at the
official echan!e rate. The "o"ulation numbered some 16# million in $%%& with a 1.&1' !rowth
rate. (o more than )).%' of adults are literate* and life e"ectancy is about 6+ years. ,n -.
$%%&-$%%/* the GDP !rowth rate was 0.#'* and unem"loyment was estimated at 1+'. .ear-
o1er-year consumer "rice inflation a1era!ed 10.6' in $%%/. 2ain inflation dri1ers include food
and utility "rices* the Pakistani ru"ee3s de"reciation 1ersus the 4.5. dollar* and hi!her
international commodity "rices. 6ow le1els of s"endin! in the social ser1ices and hi!h "o"ulation
!rowth ha1e contributed to "ersistent "o1erty and une7ual income distribution. Pakistan8s
etreme "o1erty and underde1elo"ment are key concerns* es"ecially in rural areas. The country3s
economy remains 1ulnerable to internal and eternal shocks due to internal security concerns
and the !lobal financial crises.
Reform, Aid, and Debt
Des"ite its economic and "olitical difficulties* Pakistan has taken some ste"s o1er the years to
liberali9e its trade and in1estment re!imes* either unilaterally or in the contet of commitments
made with the World Trade :r!ani9ation ;WT:<* ,nternational 2onetary -und ;,2-<* and the
World Bank. Pakistan has recei1ed si!nificant loan=!rant assistance from international financial
institutions ;e.!.* the ,2-* the World Bank* and the >sian De1elo"ment Bank ;>DB<< and bilateral
donors* "articularly after it be!an usin! its military=financial resources in counterterrorism efforts.
,n $%%%* the !o1ernment made si!nificant macroeconomic reforms? "ri1ati9in! Pakistan8s state-
subsidi9ed utilities* reformin! the bankin! sector* institutin! a world-class anti-money launderin!
law* crackin! down on "iracy of intellectual "ro"erty* and mo1in! to 7uickly resol1e in1estor
dis"utes. >fter the 5e"tember 11* $%%1 terrorist attacks in the 4nited 5tates and Pakistan8s
"roclaimed commitment to fi!htin! terror* many international sanctions* "articularly those that had
been im"osed by the 4nited 5tates* were lifted. Pakistan8s economic "ros"ects be!an to increase
si!nificantly due to un"recedented inflows of forei!n assistance at the end of $%%1* and the trend
was e"ected to continue throu!h $%%/. ,n $%%$* the 4nited 5tates led Paris @lub efforts to
reschedule Pakistan8s debt on !enerous terms* and in >"ril $%%0 the 4nited 5tates reduced
Pakistan8s bilateral official debt by $1 billion. ,n $%%+* a""roimately $)%% million more in bilateral
debt relief was !ranted. -orei!n echan!e reser1es and e"orts !rew to record le1els after a
shar" decline. The ,2- lauded Pakistan for its commitment in meetin! lender re7uirements for a
$1.0 billion ,2- Po1erty Aeduction and Growth -acility loan* which it com"leted in $%%+* for!oin!
the final "ermitted tranche. The Go1ernment of Pakistan was successful in issuin! so1erei!n
bondsB it issued $6%% million in ,slamic bonds* "uttin! Pakistan back on the in1estment ma".
:n :ctober &* $%%)* a ma!nitude #.6 earth7uake struck Pakistan* ,ndia* and >f!hanistan. The
e"icenter of the earth7uake was near 2u9affarabad* the ca"ital of Pakistani-administered
Cashmir* and a""roimately 6% miles north-northeast of ,slamabad. >n estimated #)*%%% "eo"le
were killed and $.) million "eo"le were left homeless. The disaster of such a hu!e ma!nitude
!al1ani9ed an international rescue and reconstruction effort in su""ort of the affected re!ion. The
earth7uake cost Pakistan $1.1 billion in resettlin! those affected. Des"ite the $%%) earth7uake*
GDP !rowth remained stron! at 6.6' in fiscal year $%%)-$%%6. @onsumer "rice inflation eased
sli!htly to an a1era!e of &' in $%%)-$%%6 from /.0' in $%%+-$%%).
,n $%%&* the ratio of total debt and liabilities to GDP* a broad measure of the country8s ca"acity to
sustain debt* saw an end to a se1en-year declinin! trend* risin! in -. $%%& to 6%'. The stock of
Pakistan8s total debt and liabilities increased by $#' year on year in $%%&* to PCA 6*+1#.+ billion
;4.5. $&%.# billion at #/.) ru"ees "er dollar<* with a commensurate deterioration in debt
sustainability indicators. The fiscal deficit widened from ).6' of GDP in 1//+-/)* to #.#' in
1//#-/&* and to ).+' in $%%&-$%%/. 5u""ort for loss-makin!* state-owned enter"risesB fuel
subsidiesB and a weak domestic ta base ha1e been critical elements in the recurrin! fiscal
deficits.
,n :ctober $%%&* Pakistan entered into a $0-month 5tand-By >rran!ement with the ,2- in order
to kee" the country sol1ent and to su""ort its forei!n echan!e reser1es* which had fallen to
"recariously low le1els. The $11.0 billion ,2- loan su""orts two key obDecti1es of restorin!
macroeconomic stability and confidence in the economy throu!h a si!nificant ti!htenin! of
macroeconomic "olicies and ensurin! social stability and ade7uate su""ort for the "oor. :ther
reforms include im"ro1ements in bankin! and ta le!islation* "hasin! out electricity subsidies*
and reducin! forei!n echan!e market inter1ention by the 5tate Bank of Pakistan. > contin!ency
"lan for handlin! "roblem banks has been "re"ared and is bein! stren!thenedB an action "lan to
reform ta "olicy and administration has been ado"ted and will be im"lemented with technical
assistance from the ,2- and the World Bank.
Pakistan remains de"endent on ,2- and other international assistance for bud!etary su""ort and
to kee" the country more or less sol1ent. 5o far* Pakistan has met some of the ,2- benchmarks*
most recently im"lementin! a 10.6' increase in electricity "rices in Eanuary $%1%. ,n $%%/*
Pakistan also recei1ed $$.11 billion in aid from the F-riends of PakistanG !rou" of allies* who
"led!ed $).# billion in total.
Agriculture and Natural Resources
Pakistan8s "rinci"al natural resources are arable land* water* hydroelectric "otential* and natural
!as reser1es. >bout $&' of Pakistan8s total land area is under culti1ation and is watered by one
of the lar!est irri!ation systems in the world. >!riculture accounts for about $1' of GDP and
em"loys about +$' of the labor force. The most im"ortant cro"s are cotton* wheat* rice*
su!arcane* fruits* and 1e!etables* which to!ether account for more than #)' of the 1alue of total
cro" out"ut. Des"ite intensi1e farmin! "ractices* Pakistan remains a net food im"orter. Pakistan
e"orts rice* fish* fruits* and 1e!etables and im"orts 1e!etable oil* wheat* cotton ;net im"orter<*
"ulses* and consumer foods.
The economic im"ortance of a!riculture has declined since inde"endence* when its share of GDP
was around )0'. -ollowin! the "oor har1est of 1//0* the !o1ernment introduced a!riculture
assistance "olicies* includin! increased su""ort "rices for many a!ricultural commodities and
e"anded a1ailability of a!ricultural credit. -rom 1//0 to 1//#* real !rowth in the a!ricultural
sector a1era!ed ).#' but declined to +.#' in -. $%%&-$%%/.
Pakistan has etensi1e ener!y resources* includin! fairly si9able natural !as reser1es* some
"ro1en oil reser1es* coal* and lar!e hydro"ower "otential. Howe1er* e"loitation of ener!y
resources has been slow due to a shorta!e of ca"ital and domestic and international "olitical
constraints. -or instance* domestic !as and "etroleum "roduction totals only about half the
country8s ener!y needs* and de"endence on im"orted oil contributes to Pakistan8s "ersistent
trade deficits and shorta!e of forei!n echan!e.
Industry
Pakistan8s manufacturin! sector accounts for about $)' of GDP. @otton tetile "roduction and
a""arel manufacturin! are Pakistan8s lar!est industries* accountin! for about )1.+' of total
e"orts. :ther maDor industries include food "rocessin!* be1era!es* construction materials*
clothin!* and "a"er "roducts. 2anufacturin! sector !rowth has slowed in the last two years due
to ener!y shorta!es and ca"acity constraints. Howe1er* the sector is forecast to !row ).)' for
-. $%1%. Des"ite !o1ernment efforts to "ri1ati9e lar!e-scale "arastatal units* the "ublic sector
continues to account for a si!nificant "ro"ortion of industry. The !o1ernment seeks to di1ersify
the country8s industrial base and bolster e"ort industries. (et forei!n in1estment in Pakistani
industries is only %.)' of GDP. Pakistan8s search for additional forei!n direct in1estment has
been ham"ered by concerns about the security situation* domestic and re!ional "olitical
uncertainties* and 7uestions about Dudicial trans"arency.
Foreign Trade
Weak world demand for its e"orts and domestic "olitical uncertainty ha1e contributed to
Pakistan8s hi!h trade deficits. ,n -. $%%&* the trade deficit was o1er $1) billion. ,n the $%%&-$%%/
bud!et* the Go1ernment of Pakistan raised the maimum tariffs from the $%'-$)' ran!e to the
0%'-0)' ran!e on 0%% luury items due to the lar!e trade !a" and !rowin! current account
deficit. ,n the on!oin! $%%/-$%1% fiscal year* Pakistan3s trade deficit decreased to $1%./$ billion
as a result of a decline in im"orts and a sli!ht increase in e"orts.
2aDor im"orts* which fell to $$&.+ billion in $%%/* include "etroleum and "etroleum "roducts*
edible oil* wheat* chemicals* fertili9er* ca"ital !oods* industrial raw materials* and consumer
"roducts. Iner!y im"orts account for nearly 0%' of Pakistan8s im"orts* and the total !a" between
electricity su""ly and demand in Pakistan is o1er +*&%% me!awatts ;2W<. The on!oin! ener!y
crisis and security concerns* to!ether with a decline in !lobal demand* ha1e ham"ered Pakistan3s
tetile-reliant e"ort base. Pakistan8s e"orts continue to be dominated by cotton tetiles and
a""arel* des"ite !o1ernment di1ersification efforts.
Real GDP growth rate (!!" est#$% $.#'.
Per ca&ita GDP (year ending !!", &urchasing &ower &arity$% $$*6%%.
Natural resources% >rable land* natural !as* limited oil* substantial hydro"ower "otential* coal*
iron ore* co""er* salt* limestone.
Agriculture% Products--wheat* cotton* rice* su!arcane* e!!s* fruits* 1e!etables* milk* beef*
mutton.
Industry% Types--tetiles J a""arel* food "rocessin!* "harmaceuticals* construction materials*
shrim"* fertili9er* and "a"er "roducts.
Trade (!!" est#$% Exports--$1#.&# billion? tetiles ;!arments* bed linen* cotton cloth* and yarn<*
rice* leather !oods* s"orts !oods* car"ets* ru!s* chemicals and manufactures. Major partners
;$%%&<--4.5. 16'* 4nited >rab Imirates 11.#'* >f!hanistan &.6'* 4.C. +.)'* @hina +.$'.
Imports--$$&.01 billion? "etroleum* "etroleum "roducts* machinery* "lastics* "a"er and "a"er
board* trans"ortation e7ui"ment* edible oils* "ulses* iron and steel* tea. Major partners ;$%%&<--
@hina 1+.1'* 5audi >rabia 1$'* 4.>.I. 11.$'* Cuwait ).+'* ,ndia +.&'* 4.5. +.#'* 2alaysia
+.1'.