Thursday, January 11, 2018

World Bank: Pakistan Outperforming Emerging Economies Average

The World Bank sees Pakistan's GDP to grow 5.5% in current fiscal year 2017-18 ending in June 2018, a full percentage point faster than the 4.5% average GDP growth for Emerging and Developing Economies (EMDEs) that include Argentina, Brazil, China, India, Nigeria and Russia among others. However, Pakistan economic growth continues to lag growth forecast for regional economies of India and Bangladesh. The report also highlights the issue to growing trade deficit and current account gap that could lead to yet another balance of payments crisis for Pakistan requiring another IMF bailout.

Source: World Bank Group
Pakistan GDP Growth: 

Here's an excerpt of the January 2018 World Bank report titled "Global Economic Prospects" as it relates to Pakistan:

"In Pakistan, growth continued to accelerate in FY2016/17 (July-June) to 5.3 percent, somewhat below the government’s target of 5.7 percent as industrial sector growth was slower than expected. Activity was strong in construction and services, and there was a recovery in agricultural production with a return of normal monsoon rains. In the first half of FY2017/18, activity has continued to expand, driven by robust domestic demand supported by strong credit growth and investment projects related to the China-Pakistan Economic Corridor. Meanwhile, the current account deficit widened to 4.1 percent of GDP compared to 1.7 percent last year, amid weak exports and buoyant imports."

Growing External Account Imbalance: 

The report correctly points out the problem of growing current account deficit that could turn into a balance of payments crisis unless the trade deficits are brought under control. Recent trends in the last three months do offer some hope with December 2017 exports up 15% while imports increased 10%. Exports in November increased 12.3%.

Along with double digit increase in exports in the last two months, Pakistan received remittances amounting to $1.724 billion in December 2017, 8.72% higher compared with $1.585 billion the country received in the same month of the previous year, according to data released by the State Bank of Pakistan (SBP), as reported by Express Tribune.

Summary:

Pakistan's economic growth is continuing to accelerate amid rising rising investments led by China-Pakistan Economic Corridor related infrastructure and energy related projects.  The World Bank sees Pakistan's GDP to grow 5.5% in current fiscal year 2017-18 ending in June 2018, a full percentage point faster than the 4.5% average GDP growth for Emerging and Developing Economies (EMDEs) that include Argentina, Brazil, China, India, Nigeria and Russia among others. However, Pakistan economic growth continues to lag growth forecast for regional economies of India and Bangladesh. The report also calls attention to the expanding current account gap as a matter of concern that must be taken seriously by the government to avoid yet another return to the International Monetary Fund (IMF).

Related Links:

Haq's Musings

CPEC is Transforming Least Developed Parts of Pakistan

Per Capita Income in "Failed State" of  Pakistan Rose 22% in 5 Years

Credit Suisse Wealth Report 2017

Pakistan Translates GDP Growth to Citizens' Well-being

Rising Motorcycle Sales in Pakistan

Depth of Deprivation in India

Chicken vs Daal in Pakistan

China Pakistan Economic Corridor


6 comments:

Anonymous said...

International Monetary Fund’s mission to Pakistan on Thursday said that the country’s economy is expected to grow by 5.6 percent.

Led by Herald Dinger, the IMF mission to Pakistan said it welcomes the State Bank’s move to allow the currency exchange rate to adjust to market conditions, adding that a “continued exchange rate of flexibility in the period ahead will be important”.

The mission stressed that an adjustment would be beneficial for Pakistan’s exports and economic growth.

As part of its post-program monitoring, an IMF delegation is on a visit to Pakistan to meet Pakistani officials. It has already concluded its first round of discussions on the country’s economy last week and was expected to conclude its policy-level talks by the end of this week.

https://dailytimes.com.pk/159397/pakistans-economy-expected-grow-5-6-imf/

Riaz Haq said...

India May Be The World's Fastest Growing Economy, But Regional Disparity Is A Serious Challenge

https://www.forbes.com/sites/salvatorebabones/2018/01/10/india-may-be-the-worlds-fastest-growing-economy-but-regional-disparity-is-a-serious-challenge/#23d049bd53ac

All of India is poor. The GDP per capita of Delhi, the National Capital Territory with a population of 20-25 million, is roughly equal to that of Indonesia at around $4,000. Bihar and Uttar Pradesh, India's poorest states, are on a par with sub-Saharan Africa (less than $1,000). And geographical disparities matter much more in India than in other large countries. In the United States, the richest state (Massachusetts) has roughly twice the GDP of the poorest (Mississippi). In China the ratio is 4-1 between Beijing and Gansu. In India, Delhi's GDP per capita is eight times that of Bihar.

In southern India, Bangalore is famous as India's technology capital, home to companies like Flipkart, Infosys and Wipro, as well as the Indian Institute of Science, India's top-ranked university. Yet the state of which Bangalore is the capital, Karnataka, has a GDP per capita of around $2,400, roughly the same as Papua New Guinea. Tech entrepreneurs drive to work past open sewers and shantytowns. The real Silicon Valley in California has similar problems with inequality, but the scale of inequality in Bangalore is something completely different.

If India's Prime Minister Narendra Modi is serious about his election slogan Sabka Saath, Sabka Vikas (Together with All, Progress for All), then reducing India's regional disparities should be high on his agenda. Modi's GST reform was an indispensable measure to reduce internal trade barriers, and his highway construction program is a good start toward knitting the country together. But India will need a lot more regional growth and much more generous fiscal transfers to its poorer states to overcome its extreme regional disparities.

India as a whole won't reach middle-income status until it unites its poorer states into the same Incredible India economy as the rest of the country. That's a challenge beyond the remit of any one government. But Modi and his BJP government swept to power in 2014 on the votes of India's poorest states, of the people most excluded from India's economic growth. If Modi wants to retain his majority in the next parliamentary elections, he would do well to focus on reducing the regional disparities that played such a key role in bringing him to office in the first place.

Riaz Haq said...

Hold your elephants. The Indian middle class conjured up by the marketers and consultants scarcely exists. Firms peddling anything much beyond soap, matches and phone-credit are targeting a minuscule slice of the population (see article). The top 1% of Indian adults, a rich enclave of 8m inhabitants making at least $20,000 a year, equates to roughly Hong Kong in terms of population and average income. The next 9% is akin to central Europe, in the middle of the global wealth pack. The next 40% of India’s population neatly mirrors its combined South Asian poor neighbours, Bangladesh and Pakistan. The remaining half-billion or so are on a par with the most destitute bits of Africa. To be sure, global companies take the markets of central Europe seriously. Plenty of fortunes have been made there. But they are no China.

https://www.economist.com/news/leaders/21734454-should-worry-both-government-and-companies-india-has-hole-where-its-middle-class-should-be

Centre parting

Worse, the chances of India developing a middle class to match the Middle Kingdom’s are being throttled by growing inequality. The top 1% of earners pocketed nearly a third of all the extra income generated by economic growth between 1980 and 2014, according to new research from economists including Thomas Piketty. The well-off are ten times richer now than in 1980; those at the median have not even doubled their income. India has done a good job at getting those earning below $2 a day (at purchasing-power parity) to $3, but it has not matched other countries’ records in getting those on $3 a day to earning $5, those at $5 a day to $10, and so on. Middle earners in countries at India’s stage of development usually take more of the gains from growth. Eight in ten Indians cite inequality as a big problem, on a par with corruption.

The reasons for this failure are not mysterious. Decades of statist intervention meant that when a measure of liberalisation came in the early 1990s, only a few were able to benefit. The workforce is woefully unproductive—no surprise given the abysmal state of India’s education system, which churns out millions of adults equipped only for menial work. Its graduates go on to toil in small or micro-enterprises, operating informally; these “employ” 93% of all Indians. The great swell of middle-class jobs that China created as it became the workshop to the world is not to be found in India, because turning small businesses into productive large ones is made nigh-on impossible by bureaucracy. The fact that barely a quarter of women work—a share that has seen a precipitous decline in the past decade—only makes matters worse.

Good policy can do an enormous amount to improve prospects. However, hope should be tempered by realism. India is blessed with a deeply entrenched democratic system, but that is no shield against poor decisions. The sudden and brutal “demonetisation” of the economy in 2016 was meant to target fat cats, but ended up hurting everybody. And the path to prosperity walked by China, where manufacturing produced the jobs that pushed up incomes, is narrowing as automation limits opportunities for factory work.

All of which means that companies need to deal with the India that exists today rather than the one they wish to emerge. A strategy of waiting for Indians to develop a taste for products that the global middle class indulges in—cars as income per head crosses one threshold, foreign holidays when it crosses the next—may lead to decades of frustration. Only 3% of Indians have ever been on an aeroplane; only one in 45 owns a car or lorry. If nearly 300m Indians count as “middle class”, as HSBC has proclaimed, some of them make around $3 a day.

Z Basha Jr said...

We had the worlds largest GDP under Mughals.. We can regain our lost glory if we believe in it..

Riaz Haq said...

135 Million Millennials Drive World's Fastest Retail Market

Middle class expected to surpass U.K., Italy over 2016-21
By 
Faseeh Mangi
September 28, 2017, 1:00 PM PDT
From 

Nearly two-thirds of Pakistan population under 30 years old
Pakistan’s retail stores forecast to grow by 50% in 5 years
Pakistan’s burgeoning youth and their freewheeling attitude toward rising incomes have turned the nation into the world's fastest growing retail market.




The market is predicted to expand 8.2 percent per annum through 2016-2021 as disposable income has doubled since 2010, according to research group Euromonitor International. The size of the middle class is estimated to surpass that of the U.K. and Italy in the forecast period, it said.





Pakistan's improving security environment, economic expansion at near 5 percent and cheap consumer prices are driving shoppers to spend up big. Almost two-thirds of the nation's 207.8 million people are aged under 30, according to the Jinnah Institute, an Islamabad-based think tank.




“We have a new millennial shopper at hand. They don’t mind spending to have the kind of lifestyle they would like,” said Shabori Das, senior research analyst at Euromonitor. “It’s not like the Baby Boomer generation where savings for the future generation was important.”





Pakistan is bucking the trend in the U.S. -- where stores are closing at a record pace as e-commerce undermines bricks-and-mortar. It's also attracting foreign operators: Turkish home appliance maker Arcelik AS and Dutch dairy giant Royal FrieslandCampina NV entered the market last year via acquisitions. Meanwhile, Hyundai Motor Co., Kia Motors Corp. and Renault SA are all building plants in the South Asian nation.

Pakistan’s retail stores are expected to increase by 50 percent to 1 million outlets in the five years through 2021, Euromonitor said. Its three biggest malls, Lucky One in Karachi and Packages Mall and Emporium Mall in Lahore, opened in the past two years.


Pakistan is mirroring what India went through about four years ago. Both countries have young populations with more income and less inclination toward saving which is a distinct difference to what retailers elsewhere are dealing with, said Das.



https://www.bloomberg.com/news/articles/2017-09-28/135-million-millennials-drive-world-s-fastest-retail-market

Riaz Haq said...

Pakistan is ranked third, with growth expected to reach 5.3% in 2017 and 5.6% in 2018, partly as a result of ongoing investment in the China-Pakistan Economic Corridor.

https://www.forbes.com/sites/dominicdudley/2017/10/11/fastest-slowest-economies-middle-east/#3d99961a3d37

https://www.facebook.com/photo.php?fbid=10160135258970227&set=a.10152025168310227.892634.785640226&type=3&theater