Wednesday, July 4, 2018

Pakistan's Economic Performance Since 1960

Asia 2025, a US Defense Department Study produced in summer of 1999, forecast that Pakistan would "disappear" as an independent state by 2015.  Since the issuance of this dire forecast, Pakistan has not only survived but its economy has nearly quintupled from $62 billion in 1999 to over $300 billion in 2018. This has happened in spite of political corruption and instability and terror Pakistan has suffered from due to the Afghan war next door and Indian sponsored proxy war against it.

US Department of Defense Summer Study 1999

Dire Forecasts:

The US DoD 1999 forecast was not the first nor would it be the last dire prediction by western and Indian "scholars" working in the American academia and Washington think tanks.

Many western and Indian analysts have been forecasting Pakistan's demise as the country struggles to deal with terrorism at home. Among them is former President George W. Bush's adviser David Kilcullen.

"We're now reaching the point where within one to six months we could see the collapse of the Pakistani state, also because of the global financial crisis, which just exacerbates all these problems. . . . The collapse of Pakistan, al-Qaeda acquiring nuclear weapons, an extremist takeover -- that would dwarf everything we've seen in the war on terror today", said Bush Iraq adviser, David Kilcullen, on the eve of Pakistan Day in 2009 commemorating Pakistan Resolution of 1940 that started the Pakistan Movement leading to the creation of the nation on August 14, 1947. Kilcullen is not alone in the belief that Pakistani state is in danger of collapse.

Others, such as Shahan Mufti of the Global Post, argued in 2009 that Pakistan is dying a slow death with each act of terrorism on its soil.

In 1947, Lord Mountbatten, the British Viceroy of India who oversaw the partition agreed with the assessment of Pakistan made by India's leaders when he described Pakistan as a "Nissen hut" or a "temporary tent" in a conversation with Jawarhar Lal Nehru.

Here's the exact quote from Mountbatten: "administratively it [wa]s the difference between putting up a permanent building, a nissen hut or a tent. As far as Pakistan is concerned we are putting up a tent. We can do no more." The Brits and the Hindu leadership of India both fully expected Pakistan to fold soon after partition.

GDP Growth Comparison 1998-2018

Economic Comparisons:

In spite of all of the multiple challenges on several fronts that Pakistan continues to face, the country's 5X GDP growth over the last two decades is not too shabby when compared with India's 6.5X jump in the same period. Here are the figures for several countries from Spectator Index:

China:  13X growth in  GDP from $1 trillion in 1998 to $13.1 trillion in 2018

India: 6.5X growth in GDP from $400 billion in 1998 to $2.6 trillion in 2018

Pakistan: 5X growth in GDP from $62 billion in 1998 to $308 billion in 2018

United States: 2.2X growth in GDP from $9 trillion in 1998 to $20 trillion in 2018

Japan: 1.25X growth in GDP from $4 trillion in 1998 to $5 trillion in 2018

Per Capita Incomes:

Pakistan has not done as well in terms of per capita income growth for several reasons including poor governance and corruption since 2008 and faster population growth than in China, India and other countries. Per Capita income in Pakistan grew 22% since 2012, half of the 43% growth in India during the same period. China topped with 48% in per capita income since 2012.

Here are per capita income growth figures for selected countries since 2012:

China: 48%, India: 43%, Turkey: 32%, Indonesia: 29%, Pakistan: 22%, UK: 15%, US: 15%, Japan: 15%, Germany: 13%, Canada: 13%, France: 11%, Saudi Arabia: 10%, Greece: 9.5%, Russia: 8%, Italy: 8%, Nigeria: 7.5% and Brazil: 0%.

Per Capita GDP Comparison. Source: Hindustan Times

Pakistan has lagged its peers in per capita income growth over the last 5 decades. Pakistan's economic performance is especially disappointing relative to Asian Tigers like Malaysia and South Korea.  Pakistan was on a similar trajectory as the Asian Tigers during 1960s under Gen Ayub Khan's rule. GDP growth in this decade jumped to an average annual rate of 6 percent from 3 percent in the 1950s, according to Pakistani economist Dr. Ishrat Husain. Dr. Husain says: "The manufacturing sector expanded by 9 percent annually and various new industries were set up. Agriculture grew at a respectable rate of 4 percent with the introduction of Green Revolution technology. Governance improved with a major expansion in the government’s capacity for policy analysis, design and implementation, as well as the far-reaching process of institution building.7 The Pakistani polity evolved from what political scientists called a “soft state” to a “developmental” one that had acquired the semblance of political legitimacy. By 1969, Pakistan’s manufactured exports were higher than the exports of Thailand, Malaysia and Indonesia combined."

Pakistan Growth By Decades. Source: National Trade and Transport Facility

Since 1947, Pakistan has seen three periods of military rule: 1960s, 1980s and 2000s. In each of these decades, Pakistan's economy has performed significantly better than in decades under political governments. The worst decade for Pakistan's economy was 1990s, also known as the lost decade, when the GDP grew just 4% as Benazir Bhutto and Nawaz Sharif took turns to mismanage it.

Pakistan's GDP growth in decades under military rule has been 1.5-2.5% faster on average than under civilian rule. Though the difference of 1.5% in GDP growth appears small, it would have made a huge difference when compounded over multiple decades and put Pakistan in the ranks of Asian Tigers.


Pakistan has defied repeated dire forecasts of doom and gloom since its independence. Its economy has grown 500% over the last two decades in spite of political corruption and serious security challenges and instability created by the Afghan war next door and Indian sponsored proxy war against it.  Pakistan's GDP growth in decades under military rule has been 1.5-2% faster on average than under civilian rule. Though the difference of 1.5% in GDP growth appears small, it would have made a huge difference when compounded over multiple decades and put Pakistan in the ranks of Asian Tigers.

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Jamshed Ahir said...

Two points you make are baffling.

"Pakistan has lagged its peers in per capita income growth over the last 50 decades." Pakistan has only been in existence for the last 70 years and technically only 47 years since 1971.

1960:2016 Per Capita GDP Comparison. Source: Hindustan Times is equally baffling. The use of 1960 as a base year and claim "Pakistan" grew 5X is incorrect. West Pakistan in 1960 was the most prosperous region and East Pakistan was the poorest region in South Asia per UN statistics. India was the average of the two in 1960.

Since 1971 Pakistan has lagged South Asia in economic growth and other markers despite being the most prosperous country in 1971!

Riaz Haq said...

#Pakistan: Beyond the stereotypes: Rural #women in colorful attires, girls learning boxing, countryside kids playing #football on a dusty street, tribal men learning English, rare #Asian rhino, vibrantly painted rickshaws that show rich #culture

Rural women in multi-coloured attire, young girls learning boxing, traditional kushti (wrestling) matches, countryside kids playing football on a dusty street, tribal men learning the English language, a girl from Gilgit-Baltistan playing Rubab (a lute-like musical instrument), the rare Asian one-horned rhino, vibrantly painted rickshaws that are emblems of a cultural richness ... these are images of Pakistan so rarely seen in mainstream media dominated as it is by narrow narratives of violence, strife and politics that it drove a Pakistani freelance photojournalist to do something about overturning the stereotypes.
“All you hear about Pakistan in the news is about terrorism, politics or poverty. But the Pakistan I know and live in is more than that. Pakistan is full of colours, smiles and diversity,” Saleem told Gulf News. And then last February, as he scrolled through his Instagram feed, he came across a cascade of images from a city that was on the other side of the border, in India. The Everyday Mumbai project that was all about capturing quotidian glimpses of the bustling megapolis.
“I was so inspired by the Everyday Mumbai project and its creator Chirag Wakaskar that I contacted the global community of Everyday Projects to start a similar project for Pakistan,” he said. Thus was born Everyday Pakistan.

Everyday Projects is a photography education non-profit and a collective of Instagram feeds which represents more than 50 countries. Its mission, according to the website, is to use photography “to challenge stereotypes that distort our understanding of the world.” The collective audience of Everyday Projects is over 1 million now.

Everyday Pakistan launched early this year with Saleem as the founder/curator with the assistance of a fellow writer, Anushe Noor. What started as a one-man mission to challenge stereotypes about his homeland now boasts nearly 58,000 followers on Instagram with a significant following on other social media platforms. “Everyday Pakistan is transforming negative perceptions, one photo at a time,” Saleem said.
The Instagram account offers a kaleidoscopic view of Pakistan’s innumerable wealth in terms of its people, cultures, natural resources, traditions and way of life.

From the fascinating shots of St. Patrick’s Cathedral in Karachi, Buddha statues at the Bhamala Stupa near Khanpur, shrine of Sufi Saint Hazrat Ali Hajvery in Lahore, Shri Naval Mandir Narayanpura Hindu Temple in Karachi, and a portrait of 55-year-old Pakistani Sikh from Gurdwara Punja Sahib in Hassan Abdal, Everyday Pakistan brings to light the stunning cultural and religious diversity in Pakistan.
The most popular post was of a young man offering prayer in the caves of Quetta which received more than 130,000 likes.
During Ramadan and Eid, he received many requests from all over the world to share more photos of the festival as people were curious to learn more about Pakistan.
Through the online photo documentary project, Saleem also aims to provide a platform to local photographers to promote photojournalism in Pakistan and build a community of storytellers by giving viewers an honest insight into Pakistan.
A shared sense of history

Riaz Haq said...

Latest World Bank data on GDP published in June, 2018:

Pakistan GDP in current US$ 1960: $3.7 billion, 2017: $305 billion

India GDP in current US$ 1960: $36.5 billion, 2017: $2,597 billion

Rashid A. said...

Wow, this is amazing.

Pakistan GDP grew from 3.7 to 305 billion or 82.4 times.

India GDP grew from 37 to 2597 billion or 71.15 times.

If Pakistan grew at the same rate as India, Pakistan’s GDP would have been 263.25 billion.

And that growth inspire of all the terrorism and in the face of economic hardship.

I hope the 1960 date for Pakistan is for the territory in what is Pakistan now abd does not include Bangladesh in it.

Riaz Haq said...

Rashid: "I hope the 1960 date for Pakistan is for the territory in what is Pakistan now abd does not include Bangladesh in it."

The World Bank has split 1960 GDP between Pakistan ($3.71 billion) and Bangladesh ($4.27 billion) for a total of $7.98 billion.

My guess is the WB split $7.98 billion between east and west based on population ratio in 1960.

BTW, the WB says Bangladesh GDP has grown from $4.27 billion in 1960 to $250 billion in 2017 or 58.5 times.

This compares with Pakistan GDP growth from 3.7 billion in 1960 to $305 billion in 2017 or 82.4 times.

And India GDP growth from $37 billion in 1960 to $2,597 billion in 2017 or 71.15 times.

Rashid A. said...

Thank you Riaz Sahib, for looking up this data. It lifts spirits.

The following come to mind:

Nahin Hai Na-Umeed Iqbal Apni Kisht-e-Weeran Se
Zara Nam Ho To Ye Mitti Bohat Zarkhaiz Hai Saqi

But of his barren acres Iqbal will not despair:
A little rain, and harvests shall wave at last, oh Saki!

Riaz Haq said...

Rashid: "Thank you Riaz Sahib, for looking up this data. It lifts spirits."

Pakistan's 82X growth in GDP since 1960 looks impressive relative to the world average growth of 60X since 1960.

However, it pales in comparison to more than 380X for South Korea, 200X growth for China and 150X for Malaysia.

Riaz Haq said...

After 5.8% growth in #GDP in FY 2017-18, #Pakistan’s #economy is $313.13 billion as of June 2018, says the nation's central bank

The size of Pakistan’s economy stood at $313.13 billion at the end of June, 2018, according to provisional figures released on Thursday by the country’s central bank, as a weaker currency took toll on gross domestic product (GDP) in dollar terms.

Pakistan’s GDP stood at $304.97 billion at the end of June, 2017, and the economy registered a 13-year high GDP growth rate of 5.8% in FY18. That said, the size of the economy shrunk in dollar terms as the rupee weakened against the greenback in four separate rounds since December 2017, with a 5.8% growth rate effectively reduced to 2.7%.

The State Bank of Pakistan (SBP) used a period average month-to-month exchange rate to calculate the GDP, which according to calculations came to around Rs108 to the US dollar. With the rupee having weakened further, the size of the economy is likely to have shrunk even more in dollar terms. The currency is currently hovering around the Rs128-mark as depleting foreign exchange reserves and a widening current account deficit create a headache for economic managers that are at a loss to save the country from a balance of payments crisis.

The SBP has already increased the key interest rate by 175 basis points since January, taking it to 7.5% to tackle increasing inflationary pressure in the months to come.

Additionally, the 5.8% growth registered during FY18 is also not enough for a developing economy like Pakistan to absorb the number of job seekers that pile up each year. According to experts and global financial institutions, Pakistan needs at least 7% growth to create enough jobs and tame rising unemployment. However, the country is likely to face a slowdown in growth during the ongoing fiscal year as tighter policies to improve macroeconomic stability have a negative impact.

Ratings agencies, Moody’s and Fitch, have already lowered their forecast for Pakistan’s GDP growth, while the World Bank has also suggested that it will slow down to near 5% in FY18.

According to additional figures released by the SBP, Pakistan’s current account deficit stood at $17.99 billion in FY18, translating to 5.7% of GDP and more than twice than the government’s own estimates.

Riaz Haq said...

If you score more than 33% on Hans Rosling's quiz abut basic facts about the state of health and wealth in the world today, you know more about the world than a chimp

Read more at:

Excerpt of Factfulness by Hans Rosling

Page 201.

This is risky but I am not going to argue it anyway. I strongly believe that liberal democracy is the best way to run a country. People like me, who believe this, are often tempted to argue that democracy leads to, or its even a requirement for, other good things, like peace, social progress, health improvement, and economic growth. But here's the thing, and it is hard to accept: the evidence does not support this stance.

Most countries that make great economic and social progress are not democracies. South Korea moved from Level 1 to Level 3 (Rosling divides countries into 4 levels in terms of development, not the usual two categories of developed and developing) faster than any other country had ever done (without finding oil), al the time as a military dictatorship. Of the ten countries with the fastest economic growth, nine of them score low on democracy.

Anyone who claims that democracy is a necessity for economic growth and health improvements will risk getting contradicted by reality. It's better to argue for democracy as a goal in itself instead of as a superior means to other goals we like.

Riaz Haq said...

Goldman Sachs analysts Kevin Daly and Tadas Gedminas project Pakistan's economy to grow to become the world's sixth largest by 2075. In a research paper titled "The Path to 2075", the authors forecast Pakistan's GDP to rise to $12.7 trillion with per capita income of $27,100. India’s GDP in 2075 is projected at $52.5 trillion and per capita GDP at $31,300. Bangladesh is projected to be a $6.3 trillion economy with per capita income of $31,000. By 2075, China will be the top global economy, followed by India 2nd, US 3rd, Indonesia 4th, Nigeria 5th and Pakistan 6th.


The Path to 2075

Country GDP % Growth Rate by decades 2000-2009 to 2070-2079

Pakistan 4.7 4.0 5.0 6.0 5.9 5.3 4.7 4.0 3.4

China 10.3 7.7 4.2 4.0 2.5 1.6 1.1 0.9 0.5

India 6.9 6.9 5.0 5.8 4.6 3.7 3.1 2.5 2.1

Korea 4.9 3.3 2.0 1.9 1.4 0.8 0.3 -0.1 -0.2

Bangladesh 5.6 6.6 6.3 6.6 4.9 3.8 3.0 2.5 2.0


Country GDP in Trillions of U$ from 2000 to 2075

Pakistan 0.1 0.2 0.3 0.6 1.6 3.3 6.1 9.9 12.3

China 1.8 7.4 15.5 24.5 34.1 41.9 48.6 54.8 57.0

India 0.7 2.1 2.8 6.6 13.2 22.2 33.2 45.8 52.5

Korea 0.9 1.4 1.7 2.0 2.6 3.1 3.3 3.4 3.4

Bangladesh 0.1 0.2 0.4 0.8 1.7 2.8 4.1 5.5 6.3


Country Per Capita Income in thousands of US$ by Decade-ends 2000 to 2075

Pakistan 0.9 1.3 1.4 2.2 4.8 9.0 14.9 22.5 27.1

China 1.4 5.5 10.9 17.3 24.7 31.9 40.3 50.4 55.4

India 0.7 1.7 2.0 4.3 8.2 13.3 19.6 27.1 31.3

Korea 18.7 28.8 33.0 39.3 53.6 67.7 81.8 95.2 101.8

Bangladesh 0.7 1.1 2.3 4.4 8.4 13.5 19.7 26.9 31.0