Greece’s debt to GDP triple of Pakistan’s

Published: May 7, 2010

Developing Pakistan better than Greece’s advanced economy.

KARACHI: The International Monetary Fund (IMF) has classified Greece as an advanced economy and Pakistan as an emerging and developing economy.

Greece qualified for the Eurozone in 2000 and was admitted on January 1,2001. Both the countries face the same macroeconomic issues, the difference is that Pakistan faced the same problems two years before Greece did, said JS Global Capital research report. Both countries needed rescuing and have been helped by international monetary institutions like the IMF and which in turn are pressuring them to be implement stricter and more disciplined economic policies.

Greece’s economic credit rating was downgraded recently from A2 to A3 by Moody with a ‘negative’ outlook compared to Pakistan’s credit rating of B3 ‘stable’ outlook. “Greece has a debt to GDP of 150 per cent and Pakistan is 56.7 per cent, signifying Greek’s high macro vulnerabilities,” said JS Global Capital analysts Muzzammil Aslam and Selina Qureshi. The twin deficits of the Greek economy for year 2009 were reported at 24.8 per cent compared to 10.6 per cent of Pakistan’s.

The twin deficits relate between the current account balance and the budget balance of a country. Inflation is much more contained in Greece at 1.9 per cent as opposed to Pakistan’s 11 per cent in 2010. Greece is still embroiled in the debt crisis, despite a joint bailout from the European Union and the IMF. the euro is weakening against the international currencies, as a result and has been trading at a one-year low. Pakistan’s exports will not be significantly affected if Greece’s economic crisis persists as Pakistan’s exports to Europe is only 26 per cent of its total.

Pakistan has gone through the worst stage of its macroeconomic crisis last year. However, any upside potential rise in international oil prices and the prolonging of the power crisis is still a major risk that the economy faces, said analysts Aslam and Qureshi.

Reader Comments (7)

  • Meekal Ahmed
    May 7, 2010 - 7:03PM

    I fail to see the point of this comparison.Recommend

  • Dr. Ghulam Murtaza Khuhro
    May 7, 2010 - 8:26PM

    Comparison is misplaced. Japan’s debt is also more than 100% of its GDP. Some statistic claim USA’s total debt ( domestic and external) at least 300% of its GDP which is around 14.4 trillion dollars with potential of further increase due to fiscal hole already created and to be deepened further in future particularly due to future payments to baby boomers.
    Pakistani economy is working at its 30-40% potential. Its agriculture is extremely backward and inefficient and its manufacturing sector neither is diversified nor is working at optimum level. Its services sector which is 53.8% of GDP has relatively broad base but little depth. Our GDP is pathetically low for around 176 million persons.
    China supplies reliable and cheap electricity even to remote villages focusing mainly on nuclear energy which helps it grow at double digit figures and attracts lot of investment and investors. Where we are?Recommend

  • Ali Haider
    May 7, 2010 - 9:00PM

    Greece is in a better position. It has The EU to bail it out of the debt. We do not have anyone :)…so there is no comparison…Recommend

  • May 8, 2010 - 8:38AM

    Is this something to be proud of?Recommend

  • Meekal Ahmed
    May 8, 2010 - 6:26PM

    Mr. Ali Haider,

    We are constantly being bailed out and we are in the midst of a bailout at present!

    That I think is a major part of our problem. Recommend

  • Mohsin
    May 24, 2010 - 2:43AM

    I think after after 2 to 3 years or maybe even less Greece will be back on track & Pakistan would be in a same condition or god forbid even worst. Thats the main difference.Recommend

  • Sarah Haider
    Jun 9, 2010 - 10:16PM

    If any of our Dear Government’s finance personnel are aware of this comparison and our boasting on the fact that they have gone ahead of Greece in the debt scenario-its time to to curtail your smiles folks; because its never wise to look down and say “Hey Mom I have stood 20th in class the total students were 25″.

    Please, its time we looked up to emerging economies and make them a benchmark for getting our homeland out of the critical fiscal debts. Recommend

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