Saturday, April 13, 2019

Current Debt Crisis Threatens Pakistan's Future

Pakistan is battling massive twin deficits, deteriorating foreign currency reserves, low exports, diminishing tax revenues, a weak currency, unsustainable external debt payments, and soaring sovereign debt. This crisis has forced the country to seek IMF (International Monetary Fund) bailout, the 13th such request in Pakistan's 72 year history.

Pakistan Debt Service: Source SBP
Pakistan's debt repayment costs rose to $5.4 billion for first half of fiscal 2019 ( July 2018-Dec 2018), up from $7.5 billion for the entire fiscal 2018 (July 2017-June 2018), according to the State Bank of Pakistan. At this rate, the total debt service cost for current fiscal 2019 will exceed $11 billion, adding to the nation's debt crisis.

Pakistan's External Debt. Source: Wall Street Journal

This $11 billion debt service cost will add to the projected trade deficit of nearly $40 billion for the current fiscal year. How can Pakistan fund this balance of payments deficit of about $50 billion? Remittances of $21 billion in current FY2019 from Pakistani diaspora are expected to reduce it to $30 billion. PTI government has taken on billions of dollars in loans from Gulf Arabs and China. Given the low rates of foreign investments in the country, a big chunk of the remaining deficit will have to be met by borrowing even more funds which will further increase future debt service costs.

Pakistan's Current Account Deficit. Source: Trading Economics

As a result, Pakistan is now battling massive twin deficits, deteriorating foreign currency reserves, low exports, diminishing tax revenues, a weak currency, onerous external debt payments, and soaring sovereign debt. This crises has forced the country to seek IMF (International Monetary Fund) bailout, the 13th such request in Pakistan's 72 year history.

In the short term, PTI government's efforts are beginning to pay off. The current account deficit (CAD) in first 8 months of FY2019 (July-Feb 2018) declined to $8.844 billion, down 22.5%, from $11.421 billion in same period last year, according to SBP as reported by Dawn newspaper.

However, Pakistan's economic woes are far from over. The country's twin deficits are structural. Its exports and tax collections as percentage of its GDP are among the lowest in the world. British civil society organization Jubilee Debt Campaign conducted research in 2017 that showed that Pakistan has received IMF loans in 30 of the last 42 years, making this one of the most sustained periods of lending to any country.

History of Pakistan's IMF Bailouts

Pakistan needs to find a way to build up and manage significant dollar reserves to avoid recurring IMF bailouts. The best way to do it is to focus on increasing the country's exports that have remained essentially flat in absolute dollars and declined as percentage of GDP over the last 5 years. Pakistan's economic attaches posted at the nation's embassies need to focus on all export opportunities in international markets and help educate Pakistani businesses on the best way to take advantage of them. This needs to be concerted effort involving various government ministries and departments working closely with industry groups. At the same time, the new government needs to crack down on illicit outflow of dollars from the country.

Azad Labon Ke Sath host Faraz Darvesh discusses Imran Khan's challenges with Misbah Azam and Riaz Haq (www.riazhaq.com)

https://youtu.be/CQ41Qt_2XQM




Related Links:

Haq's Musings

South Asia Investor Review

Pakistan's Debt Crisis

Can Pakistan Avoid Recurring IMF Bailouts?

Pakistan is the 3rd Fastest Growing Trillion Dollar Economy

CPEC Financing: Is China Ripping Off Pakistan?

Information Tech Jobs Moving From India to Pakistan

Pakistan is 5th Largest Motorcycle Market

"Failed State" Pakistan Saw 22% Growth in Per Capita Income in Last 5 Years

CPEC Transforming Pakistan

Pakistan's $20 Billion Tourism Industry Boom

Home Appliance Ownership in Pakistani Households

Riaz Haq's YouTube Channel

PakAlumni Social Network

22 comments:

Azad said...

Instead of seeing Pakistan, May be you should look at India. Not too long ago, you were in the same position. These are things that can happen with bad economic policies & can be dealt with.

Riaz Haq said...

Azad: "May be you should look at India. Not too long ago, you were in the same position. These are things that can happen with bad economic policies & can be dealt with."

India runs huge #trade deficits year after year. It's heavily dependent on western money for its #economy to survive. If it wasn't for the end of the Cold War, India would be in serious trouble.

http://www.riazhaq.com/2015/04/can-indian-economy-survive-without.html …

Bilal B said...

Pakistani businessman are already being alienated by European customers due to FATF action. We must focus on China and make best use. Facing regular scrutiny in Europe while Chinese are more open minded. Also culturally we are more close to Chinese compared to western countries.

Aman Goel said...

Better we call it "Forex Reserves" than western money. India isn't only country who had boosted growth in per capita GDP after economic liberalization. China did it.
ROK even transformed into developed country. And they also invest in other countries.

West doesn't literally "love" any country. Nor India's relations have been very good with West, no matter what how much people hype.

Riaz Haq said...

AG: " India isn't only country who had boosted growth in per capita GDP after economic liberalization. China did it."

We're not talking about domestic growth here; instead, the topic is trade gap and current account gap.

Like Pakistan, India too runs huge trade deficits and it needs foreign inflows to pay for the difference. These inflows come from the West which sees India as a strategic ally since the end of the Cold War.

India's trade deficit has widened to USD 165.52 billion during the 11 months of the current fiscal from USD 148.55 billion compared to the year-ago period, the data said.



Aman Goel said...

I repeat, those inflows aren't there because west has some sort of love for India. Pakistan has been an ally of West way before end of Cold War. China has even better inflows.
One will invest capital for sure if returns are guaranteed. And that needs stability.

M Steinmeyer said...

Pakistan has had an overvalued exchange rate, low interest rates, and subdued inflation over the last few years. This loose monetary policy has led to high domestic demand, with two-thirds of Pakistan’s economic growth stemming from domestic consumption. An overvalued exchange rate has led to a very high level of imports and impeded exports. Pakistan’s high fiscal deficit was accelerated even further in 2017 and 2018 because elections have historically caused spending to rise (both of the most recent fiscal crises followed elections).

Perhaps the greatest financial issues facing Pakistan are its pervasive tax evasion, miserably low savings and chronically low level of domestic resource mobilization. Taxes in Pakistan comprise less than 10 percent of GDP, a far cry from the 15-20 percent of countries that are in it's neighborhood. Pakistan also suffers from impediments and gross mismanagement in the energy sector causing frequent and widespread power outages that hurt its competitiveness on top of the over-valued rupee.

While other developing countries and countries in its neighborhood have made structural progress and improved their external trade, Pakistan has had a reversal. Moreover, its rivalries and parity seeking focus forces the country to over rely on China in its infrastructure projects and an opaque debt burden.

Near term outlook suggests hampered GDP growth of around 4%.

Riaz Haq said...

AG: "I repeat, those inflows aren't there because west has some sort of love for India......China has even better inflows."

It's not love for India but strategic interests that guide West's policies. And right now, the West sees checking China's rise as its topmost priority in which India is seen as plying a role.


Bulk of China's inflows are made of export surpluses with many countries....including India. China's trade surplus with India exceeds $50 billion a year.

Here's an excerpt of a piece by Indian entrepreneur Jaithirth Rao published by Indian Express:

"Uday Kotak said a few months back, in the course of an interview, that he was amazed that in his new office in Mumbai, not one of the furniture or fixture items were made in India. My friend Rahul Bhasin conducted a similar exercise in his office in Delhi and discovered pretty much the same thing. The carpet is from China, the furniture is from Malaysia, the light fixtures are from China, the glass partition is from all places, Jebel Ali in the Middle East and so on. Kotak went on to add that even Ganesha statues are no longer made in India. They are imported from China."

http://indianexpress.com/article/opinion/columns/how-they-killed-our-factories/


Bilal B said...

According to my sources a pleasant surprise is awaiting IMF from China. China will propose dollar-for-dollar matching against objections raised from IMF. There is no praise left for mastery of Chinese strategy.

Ravi K said...

Riaz,

1. For India Oil is #1 import of Oil, almost 34%. Oil price is not it use to be and with the coming collapse of Oil price, things will go better only. Also India will use more of Iranian imports paying in Rupees.

2. Per RBI data, India's forex reserves grows at $2USBD every week. In other words it takes india just two months to grow more reserves than Pak's entire reserves.

3. Pak has to worry as to why no one wants to invest in Pak. CPEC seems to be doing diddly squat to improve Pak's economy.

4. When OIl price collapses, gulf jobs will vanish. Pak will be double hit with loss of remittance, a key factor in pak's forex.

Riaz Haq said...

#Pakistan #textile industry now operating at full capacity & adding capacity to grow #exports. A big textile group is eyeing its sales to grow by around 20% in the next two years, but is expecting all the increase in sales to come from #exports. #economy https://www.brecorder.com/2019/04/16/489570/betting-long-on-textile-exports/

The ministry of finance sources are expecting textile exports to grow to $7-7.5 billion in the April-June quarter – average monthly exports of $2.3-2.5 billion versus $2.0 billion in Jul18-Feb19, and $2.2 billion in Apr18-Jun18. Although industry players are not too bullish on immediate off-take, they certainly are seeing significantly high numbers in 2-3 years. For details read “Textile ready to take off“, published on 14th December 2018.


One big textile group is eyeing its sales to grow by around 20 percent in the next two years, but is expecting all the increase in sales to come from exporting. On the flip, the higher concentration of sales growth in the past five years was in domestic sales. That is the story of a big player, which is reaching a size where big expansions are hard to come by without resolving the issues of basic raw material – cotton.
However, there are many other companies that have the potential to grow at a much higher pace because of their relatively smaller size. The positive sentiments are across the board where many players are aggressively expanding. The potential is in value addition. There are multiple reasons for exuberance – currency devaluation, subsidy to textile, and availability of energy at regional competitive rates are known to all.
One big booster is improvement in perception. The overall image of the country is improving and the opening up of visa regimes is helping as well. The buyers are visiting and new orders are being placed, and there is soft commitment of new businesses, given that the expansions are carried out.
The textile exports, in volume terms, stopped growing, in the last decade. The problem of currency overvaluation is more of a recent phenomenon – started in 2014. Prior to that, energy and security started hitting the exports bad. Enough has been said on the energy, and its availability is paying dividends.
The perception improvement needs to be highlighted. The textile and other exporters swayed away from exporting to domestic sector, before the currency was capped by Dar. Buyers were not coming and it was hard to get new business. There were fears of getting shipment delayed from Pakistan and that had helped Bangladesh to grow.
Now the situation is changing. If the travel advisory from the US is relaxed, it would be a game changer for Pakistan exports – be it in goods or services. With recent tariff war between US and China, and protests against low wages in Bangladesh, buyers are thinking to diversify from these two markets. Pakistan has the opportunity to grab its lost share.
However, building requisite backward linkages are required. Three big textile players resonated that without enhancing cotton production, it is hard for textile industry to reach its true potential. One of the reasons for competitiveness erosion is fall in cotton production, which has reduced from its peak of 14-15 million bales per annum to around 10 million bales.
The long term strategy should be to take annual cotton production to 20 million bales in 5 years or so. The need is to work on our agriculture strength. The cotton seed market is orphan today with too many kids on the street – every district has multiple unregulated seed companies. The stewardship is missing. Industry players are of the opinion that the seed industry needs to be regulated and serious consolidation is required to improve the yield. The other factor is to do away with price support to other crops – such as sugarcane, which has resulted in substitution to sugarcane from cotton.

Riaz Haq said...

Textile ready to take off
BR ResearchDecember 14, 2018
The currency has depreciated over 30 percent in last 12 months but textile exports grew by a mere 6 percent during Nov17-Oct18 over the same period last year. This implies that currency adjustment alone is not sufficient to boost exports.

https://www.brecorder.com/2018/12/14/459105/textile-ready-to-take-off/

Pakistan textile exports grew by 85 percent from $5.8 billion to $10.8 billion during FY02-07 at a time when currency and cotton prices were sticky. Since then, there has been no significant growth in textile exports during the last decade, despite the fact that the value of dollar has more than doubled against the rupee during the same period. FY11 was the only exception when textile exports jumped by 34 percent due to over 100 percent increase in cotton prices during that year.

Turning around stunted growth in textile exports requires more than just currency depreciation Yes, there are advantages of recent currency adjustments; but given the capacity constraints of value added sectors, growth may remain restricted to 5-10 percent this year.

In order to go beyond, textile industry needs to significantly increase its capacity as it happened during 2002-06. No significant sector wide expansion has been recorded in the industry during the last decade which could have led to a exportable surplus. It appears that stars have aligned for significant expansion in textile over coming periods: government has set the price for gas at 6.5 cents per unit and electricity at 7.5 cents per unit, is providing long term financing at attractive rates, and is seemingly committed to flexible exchange rate. These factors are making players to seriously consider massive expansions. It takes a year or two for the industry to expand and for that process to kick start more clarity is needed in implementation, and a few more incentives are warranted.

For example, the government has to do away with 0.25 percent tax for export development fund which is wasted in TDAP and other such nuisances, and refunds of exporters need to be cleared sooner or later. Anyhow, the direction is right.

Another major impediment is the falling cotton production in the country. Back in FY05, cotton production peaked at 14.3 million bales which was aligned with industry expansion. Cotton production has been downhill since; averaging at 12.7 million bales per year during FY06-15, before further spiraling downward to average annual production of 10.8 million bales by FY16-18.

One reason for recent dip is the shift of cotton production area to sugarcane which is due to undue incentives for sugarcane production in the form of support price mechanism. Per hectare yield has also deteriorated substantially over the same period. For context, yield in Indian Punjab is around 50 percent higher than Pakistani Punjab, even though domestic yield was not far behind as recent as in FY12.

The major problem is in cotton seed research which is poor in Pakistan. Three big textile players (Nishat, Sapphire and Fatima) have formed a cotton seed company (Safina) to resolve the problem. Such interventions can resolve the problem of germination and purification of seeds; but without stewardship of a global player such as Bayer (ex Monsanto), resistance against pesticides and other harming elements cannot be developed. India, Brazil, US and many other economies have done it; it is time for Pakistan to move towards GMOs in cotton production.

Munir said...

Riazbhai please mayus na ho. Pakistan has big oil reserves and gold and inshallah we will be in a diiferent league. Time aayega jab har banda will be strong with money in pockets inshallah and the world will look at Pakistan with praise. Pakistan Zindabad!

Riaz Haq said...

#China to offer #Pakistan Asean-like market access. #Beijing has also agreed to immediately cut tariff to zero on 313 exports from Pakistan. New #FTA to be signed during the upcoming visit of Prime Minister #ImranKhan to Beijing later this month. #economy https://nation.com.pk/17-Apr-2019/china-to-offer-pakistan-asean-like-market-access

Advisor to Prime Minister on Commerce and Textile Abdul Razzak Dawood on Tuesday said that China has agreed to offer Pakistan its market access similar to that offered to countries of Association of South East Asian Nations (Asean) on Islamabad’s demand.

He further said that Chinese government has also agreed to immediately reduce duties to zero percent on 313 tariff lines. Pakistan and China would sign the second phase of Free Trade Agreement (FTA) during the upcoming visit of Prime Minister Imran Khan to Beijing later this month, the Advisor to Prime Minister said in National Assembly Standing Committee on Commerce and Textile. He said that the second phase of FTA fell into internal politics of China, as some of their Ministers were not in favour to revise the trade agreement with Pakistan. However, Chinese Prime Minister and Foreign Minister were in favour. However, the Chinese government had accepted our main demand of giving market access similar to that offered to countries of Asean, he added.

Dawood said that Turkey is not ready to give any incentive to Pakistan for exporting its textile and leather products. Turkey had imposed 27 percent duty on Pakistanis products. He further said that Afghanistan has destroyed Pakistan’s trade. The government is working to discourage the smuggling. He expressed hope that Pakistan’s exports would increase to China, Indonesia, Bangladesh, Afghanistan, and Turkey due to the policies of the incumbent government.

The 4th meeting of the Standing Committee on Commerce and textile was held under the chair of Syed Naveed Qamar MNA. The officials of the ministry of commerce informed the committee that government has successfully increased the exports and reduced the imports during ongoing fiscal year. The committee was told the imports had reduced by 8 percent in first eight months (July to February) of the ongoing fiscal year while exports had gone up during the same period.



Secretary of Ministry of Commerce Sardar Ahmad Nawaz Sukhera briefed the Committee in detail on the exports of Pakistan. The committee was informed that Pakistan’s exports were declining during the period 2014-17. However, the exports had started increasing during the ongoing fiscal year due to the government’s policies. There is need for enhancing export competitiveness components particularly in the areas i,e PM’s Package, zero rating of 5-export sectors, rationalization of energy costs for export sectors, exemption of export sectors from load shedding, tariff rationalization on raw material and intermediate products. In new policy initiatives, strategic trade policy frame work 2019-24, national tariff policy, trade related investment policy framework and regulatory reforms may be revisited for future improvements and growth of export and decline in import. On WTO, Secretary informed the committee about the Structure and functions, current issues faced by the Pakistan, the basic principles of trade were briefed in detail along with advantages of WTO. The Multi-trade agreements, dispute settlement Body, reforms, transparency and the role of E-Commerce and norms of trade facilitation agreement (TFA) briefed to committee.

Riaz Haq said...

#Pakistan All Set To Cross USD 15 billion Mark In #Textile #Exports. “The textile industry exports is likely to cross $15 billion mark in case it continues to grow by 10 percent on an average for the remaining period of current fiscal.
https://www.textileexcellence.com/news/pakistan-all-set-to-cross-usd-15-billion-mark-in-textile-exports/


Gohar Ejaz, patron in chief of APTMA (All Pakistan Textile Manufacturers Association) stressed that the availability of energy at regionally competitive price has boosted textile exports by 8.5% in the month of January 2019 on a y-o-y comparison in the corresponding period.

“The textile industry exports is likely to cross $15 billion mark in case it continues to grow by 10 percent on an average for the remaining period of current fiscal. It would likely be a record achievement of textile exports in such a short span of time. The exports of USD 3.5 billion yarn and fabric annually may boost textile exports to USD 14 billion in case closed capacity worth USD 3 billion exports is revived through the enablers ensured by the government,” pointed out Ejaz.

Riaz Haq said...

THE EXPRESS TRIBUNE > BUSINESS
Interloop to raise Rs4.9b at PSX this week

https://tribune.com.pk/story/1927532/2-interloop-raise-rs4-9b-psx-week/

Interloop Limited – the world’s largest socks exporter based in Faisalabad with Puma, Nike and H&M among its big clients – is set to raise record financing in the private sector at the Pakistan Stock Exchange (PSX) this week.

It is estimated to raise a minimum of Rs4.9 billion through the sale of 109 million shares at the bidding price starting from Rs45 per share, which may go to Rs63 during the two-day book-building process on Wednesday and Thursday.

Corporations and high net-worth individuals will participate in the bidding to find a strike price, at which the shares will be sold to them and later to the general public at the same price. The company will be listed at the PSX in the second week of April.

“The financing to be raised through book building and IPO (initial public offering) will be invested in expansion of hosiery production and setting up a new plant for (stitched) denim jeans,” Shahid Ali Habib, CEO of Arif Habib Limited, the IPO consultant, told The Express Tribune.

Senior associate investment banker at the consultant firm Dabeer Hasan added that Interloop Limited produced 50-55 million dozen of socks a year at its existing four hosiery plants – three in Faisalabad and one in Lahore.

Besides, it is also running an associate hosiery firm in Bangladesh. The world’s largest socks exporter, having 3.5-4% market share in global socks supplies, is aimed at setting up another hosiery plant in Faisalabad and a stitched denim jeans plant in Lahore, he said.

Interloop emerged as the top global supplier of hosiery after a former top Chinese exporter diverted sales to the domestic market recently, he added.

“The expansion is estimated to cost a total of Rs11.2 billion. This includes (a minimum) Rs4.9 billion through the sale of shares at the PSX,” Hasan revealed.

Besides, it has already raised a debt of Rs2.8 billion from Habib Bank Limited (HBL) for the expansion. “The expansion projects are expected to come on line in the next two years. So as and when the firm will feel the need for required gap funds, it may utilise internal resources or may take loans from banks,” he said.

The company is expanding production, keeping in view growing demand from around the world in hosiery segment, while it is sharing its stitched denim designs with its clients including Levi’s and H&M these days, said the senior associate.

“Interloop is not only in talks with its existing customers, but is also approaching new customers for its denim range. Given the global growth forecast in both hosiery and denim segments and the overall growth forecast in the garment industry, Interloop is positioned to add to its long-term growth in revenue and market share,” the company stated in its prospectus.

Habib said the company posted a profit of Rs2.2 billion in the first half (July-December) of current fiscal year 2018-19. It had recorded a profit of Rs3.8 billion in FY18.

“The company is offering shares for sale at a price (Rs45 per share), which is equivalent to 7.9 times of earnings per share (EPS) for FY19 and 6.5 times of FY20,” he said, adding it was going to be the first listing at the PSX in 2019.

Out of the total 109 million shares allocated for sale during the IPO, the company would sell 75% (or 81.75 million shares) to institutional investors and high net-worth individuals and 25% (27.25 million shares) to retail investors.

Bilal B said...

Sad that our politicians are not upping the game to match the Chinese. My sources say when China was approached to share CPEC details with IMF, the Chinese had offered choice of blue pill and red pill. Asad chose the red pill, while IK will now appoint someone who will choose the blue pill. Hope Rawalpindi gets some help going.

Salman said...

Yeh Umar ka resignation is a backward step. Lot of youth like myself had lot of trust and faith in Umar saheb now we are in danger zone as far as our economy and image. He was trying to make Pakistan strong inshallah so that we can stand on our feet and not be begging on other countries.

Riaz Haq said...

#Pakistan #trade deficit at $23.67 billion, down 13% in 9 months of current FY19. #Exports up 0.11% to $17.08 billion. #Imports down by 7.96% to $40.75 billion. #Textile exports flat at $10 billion. #Petroleum imports #10.6 billion, up 3.81%. https://nation.com.pk/19-Apr-2019/textile-exports-unchanged-at-9-99b

Pakistan’s textile exports were recorded at $9.99 billion during nine months (July to March) of the ongoing fiscal year. The country’s textile exports had remained at the same level of previous year, showing no growth. The incumbent government had provided several incentives to the five exports oriented sectors including textile to enhance the country’s exports. The government had depreciated the currency and reduced the prices of electricity and gas but it failed to achieve the desired results.

The data released by PBS showed that country’s overall exports had increased by only 0.11 percent to $17.08 billion during July to March period of the year 2018-19. The major chunk of the overall exports is from the textile sector, which remained at $9.99 billion. Exports from all other sectors are only $7.09 billion during nine months of the ongoing fiscal year.

In textile sector, according to PBS, exports of knitwear had enhanced by 9.29 percent during July to March period of the year 2018-19 over a year ago. Similarly, exports of bed wear had also recorded an increase of 2.69 percent and exports of made-up articles had gone up by 1.26 percent. Meanwhile, exports of ready-made garments had also surged by 2.02 percent in first nine months of the current financial year. The PBS data showed that exports of cotton cloth had recorded a decline of 2.09 percent. Similarly, exports of raw cotton had tumbled by 71.84 percent. Exports of cotton yarn witnessed decrease of 15.44 percent. Meanwhile, exports of towels had declined by 1.85 percent.

Meanwhile, the exports of food commodities had recorded decrease of 2.4 percent during first nine months of the current fiscal year. In food commodities, exports of fruits recorded growth of 8.66 percent, vegetables exports declined by 2.48 percent and oil seeds, nuts and kernels exports had gone up by 117 percent. Similarly, the exports of petroleum group and coal had enhanced by 21.52 percent during July to March period of the ongoing fiscal year.

Imports

The country’s imports had gone down by 7.96 percent to $40.75 billion during the nine-month period (July-March 2018/19) over the same period of the last financial year.
The country spent $10.6 billion on the imports of petroleum group, 3.81 percent higher than a year ago. In the petroleum sector, the government imported petroleum products worth $4.62 billion and spent $3.38 million on petroleum crude. Similarly, the country imported liquefied natural gas (LNG) worth $2.4 million and liquefied petroleum gas (LPG) worth $207 million.

The PBS data showed that country had spent $6.74 billion on importing machinery during July and March period of the ongoing fiscal year. The third biggest component was food commodities whose imports rose to $4.26 billion during first nine months of the ongoing financial year.

Trade deficit

The country’s trade deficit was recorded at $23.67 billion during nine months of the current financial year as against the deficit of $27.21 billion during corresponding period of the previous year. This depicts 13.02 percent or ($3.54 billion) reduction in the deficit.

Anonymous said...

Riazsir, IMF downgraded GDP growth next fiscal to 2.9! What can be done to improve it? Your comments appreciated. Thank You.

Aqsa
Studying BCom Economics

Anonymous said...

Pakistan macro-economic poor performance will lead to Bangladesh eclipsing Pakistan in PPP Per Capita much earlier now. Economists at IMF (Pak loan pending) estimate Pakistan PPP Per Capita in 2024 at $6735 and Bangladesh at $7372. India will be at $12757.

Also note that Bangladesh Per Capita Nominal edged ahead of Pakistan in 2018.

http://www.imf.org/


S Ghosh
Chittagong

Riaz Haq said...

#FDI in #Pakistan's #export industries #textile, #chemicals, #pharmaceuticals, and electrical #machinery up 50-800% but total FDI down 51% in first nine months of current fiscal 2018-19 due to outflow of #Chinese #investments from the local power sector https://www.dawn.com/news/1477425

Pakistan’s ll major industrial sectors attracted considerably high foreign direct investments (FDI) during the current financial year indicating an attraction for industrial growth in near future.

The country’s key industries such as textile, chemicals, pharmaceuticals, and electrical machinery saw their inflows jumping by 50-800 per cent.

However, the overall FDI plunged by 51pc during the first nine months of 2018-19 mainly due to outflow of Chinese investments from the local power sector, which in turn eroded the positive impact on inflows in the major industries. Outflow of Chinese investment during the period was $294 million, as compared to net inflow of $929m in same months of last fiscal year.

The highest inflows were recorded in electrical machinery, which attracted $126.6m during 9MFY19 as against $13.8m in corresponding period last year, reflecting an increase of 813pc.

Transport sector came in second as inflows into the sector jumped by 663pc to $84.3m, led by FDI worth $89.6m in cars whereas buses, trucks, vans and trails posted a $5.3m outflow.

Similarly, inflows in chemicals soared by 322pc to $113.9m during 9MFY19 versus $27.6m in same period of 207-18 while those in pharmaceutical rose 274pc to $55m from $14.7m.

The FDI in textile sector clocked in at $54m during the nine-month period, up 50pc over $36.6m in corresponding months of FY18. The sector earns over 60pc of all export proceeds for the country.

For the last couple of years, only two sectors – power and construction – have found themselves on the radar of investors while the rest have seen limited activity in terms of inflows. If latest data is to serve as an indicator for reversal, it could help boost sentiments in the local industry.

Power sector saw a steep decline in FDI as it recorded a net outflow of $293m in 9MFY19 as against $929m in corresponding period last year. Construction also seems to be ceding its gains with inflows shrinking steeply as investment in the sector slowed down to $385.4m, from $527m.

Communications saw a net outflow of $141m, led by telecommunications which recorded outflows worth $157m.