Pakistan's GDP growth rate is even higher than that of China: Harvard study

Published: July 7, 2017
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Pakistan’s 5.97 per cent growth rate is above that of China, which is set to grow by 4.41 per cent. PHOTO: Reuters

Pakistan’s 5.97 per cent growth rate is above that of China, which is set to grow by 4.41 per cent. PHOTO: Reuters

Pakistan’s 5.97 per cent growth rate is above China, which is set to grow by 4.41 per cent. PHOTO: THE ATLAS OF ECONOMIC COMPLEXITY, 2015. HARVARD CID Pakistan’s 5.97 per cent growth rate is above that of China, which is set to grow by 4.41 per cent. PHOTO: Reuters

Pakistan’s predicted annual growth rate over the next 10 years is nearly 6 per cent, according to the revised growth projections presented by researchers at the Centre for International Development (CID) at the Harvard University.

This is a one-point GDP increase as in the CID’s earlier projections, Pakistan GDP was set to grow at 5 per cent by 2025.

Although China’s huge economy (current GDP at $12 trillion) cannot be compared with that of Pakistan (current GDP at $300 billion), Pakistan’s 5.97 per cent growth rate is above that of China, which is set to grow by 4.41 per cent.

Pakistan’s 5.97 per cent growth rate is above China, which is set to grow by 4.41 per cent. PHOTO: THE ATLAS OF ECONOMIC COMPLEXITY, 2015. HARVARD CID

Pakistan’s 5.97 per cent growth rate is above China, which is set to grow by 4.41 per cent. PHOTO: THE ATLAS OF ECONOMIC COMPLEXITY, 2015. HARVARD CID

Led by Harvard Kennedy School, the research is called ‘The Atlas of Economic Complexity’.

The CID’s growth projections are based on the measures of each country’s economic complexity, which captures the diversity and sophistication of the productive capabilities embedded in its exports and the ease with which it could further diversify by expanding those capabilities.

According to the Harvard study, the economic complexity not only describes why countries are rich or poor today, but can also predict future growth — about five times more accurately than the World Economic Forum’s Global Competitiveness Index.

Pakistan’s neighbour India, on the other hand, is predicted to grow by 7.72 per cent, the world’s highest. The CID believes that the economic pole of global growth has moved over the past few years from China to neighbouring India and it is likely to stay there over the coming decade.

‘Pakistan’s GDP growth expected to hit 9-year high in current fiscal year’

Except for India, Pakistan will beat all Asian economies in GDP growth. These also include giant Muslim economies.

Here are some regional countries (and their GDP growth) Pakistan will be ahead of:

Muslim and South Asian countries:

Indonesia 5.82 per cent

Turkey 5.64 per cent

Malaysia 4.82 per cent

Sri Lanka 3.77 per cent

Saudi Arabia 3.17 per cent

Bangladesh 2.82 per cent

UAE 2.41 per cent

Shanghai Cooperation Organisation (SCO) countries:

Tajikistan 3.61 per cent

Uzbekistan 3.32 per cent

Kazakhstan 2.65 per cent

Kyrgyzstan 5.77 per cent

Russia 2.60 per cent

According to the Harvard study, the central reason for income differences is know-how. Poor countries produce few goods that many countries can make because of the lack of know-how, while rich countries produce a greater diversity of goods, including products that few other countries can make.

Harvard’s leading research hub uses this fact to measure the amount of the know-how that is held in each economy.

A major trend that emerges from Harvard’s report is that the growth in emerging markets is predicted to continue to outpace that of advanced economies, though not uniformly.

Pakistan’s GDP growth expected at 4.9%: Moody’s

In addition to Pakistan, the CID projections are also optimistic about new growth hubs in East Africa and new segments of Southeast Asia, led by Indonesia and Vietnam. it also notes that economies based on commodity output face slower growth rates as commodity prices continue to remain under pressure.

With special economic zones (SEZs) being built under the China-Pakistan Economic Corridor (CPEC) project, it is an opportunity for Pakistan to move away from commodity output by producing value-added goods in joint ventures with Chinese firms and increase its exports. This way, Pakistan can have even faster income growth.

The Harvard growth projections are in line with other short, medium and long-term GDP growth forecasts for Pakistan.

HSBC: 5 per cent leading to 2050

IMF: 5.5 per cent leading to 2020

The World Bank: 5.8 per cent leading to 2019

The Economist: 5.7 per cent in 2017

In a bid to materialise this growth projection, what needs to be chalked out is a multi-pronged strategy. Pakistan needs to diversify its product capabilities. With likely new FDI inflows, Pakistani firms can go into producing value added goods both for domestic consumption as well as exports.

The firms, currently content with domestic sales turnover, need to introduce some percentage of exports to their strategic plans. Similarly, Pakistan’s agriculture sector needs to address its lack of sophistication and crop and distribution losses. The cumulative effect of even modest steps will help increase our GDP growth.

 

Wali Zahid is an award-winning journalist and a blogger. He is Pakistan futurist and writes on the economy. He tweets @walizahid.

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Reader Comments (11)

  • Sami
    Jul 7, 2017 - 3:17PM

    Well done,
    Prime Minister!Recommend

  • Shabir Hussain
    Jul 7, 2017 - 3:20PM

    It is not only know how but infrastructure, access to capital, skilled workforce and long term stability in the regulatory and business environment which drives investment into producing diversity of goods. Many collegues with know how have become expats in other economies with growing businesses because such things are lacking. Recommend

  • chengez K
    Jul 7, 2017 - 3:27PM

    Yes….and Nawaz Sharif is the greatest leader of this world !!!!!Recommend

  • Frank
    Jul 7, 2017 - 6:09PM

    All poor, underdeveloped countries are growing at much faster rates than rich western countries. This is a global trend and no reflection on the performance of the PML-N government.Recommend

  • Malthus
    Jul 7, 2017 - 9:57PM

    Very positive news.

    What would be very interesting is to strip out population growth, in the next ten years we are predicted to add 40 million people, Africa growing even faster (percentage wise)

    China population still growing, but at a much reduced percentage.Recommend

  • Kevin Smith
    Jul 7, 2017 - 11:14PM

    If you take proper initiatives against curbing population growth, in the long run, it’ll be more optimal whether you have a high GDP or low. As capital resources can be better exported than domestically maintained. Pakistani people have been asking for big, courageous ways to improve the economy; population control is the answer. Recommend

  • sterry
    Jul 8, 2017 - 12:55AM

    @chengez K: Who cares about the world. Nawaz Sharif has done the best job of any PM or leader in the history of Pakistan. Look at how the economy is growing. That’s what scares his opponents the most and why they want to pursue Panama Papers for no reason.Recommend

  • Malthus
    Jul 8, 2017 - 2:43AM

    @Kevin Smith:
    The only way to reduce population growth is through improved education, particularly of women. as well as improved basic healthcare. This has been proved the world over.

    Our nation has other spending priorities, hence 44% of children are stunted and we globally have the largest number of children out of school.Recommend

  • Rehan Khan
    Jul 8, 2017 - 3:09AM

    This news is not a surprise. In fact similar prediction is made by other consulting groups. I know there is skepticism and its understandable based on our past history. Pakistan always had know how i.e. skilled labor but infrastructure was the bottleneck. Now with roads , railway and power projects underway this will be history, Inshallah. With road to markets and power to produce , sky is limit.Recommend

  • Rajput
    Jul 9, 2017 - 5:36PM

    What’s the point? Pakistan’s and so many other countries’ growth rate has been higher than US from last so many years! What is achieved? Stop fooling people by comparing apples with oranges. Recommend

  • Rehan Khan
    Jul 10, 2017 - 6:24AM

    Hi Rajput,

    Please note … the study is published by no other organization then Harvard, i quote ” Led by Harvard Kennedy School, the research is called ‘The Atlas of Economic Complexity’,” so you may want to request them to ” stop fooling … ”

    Regards
    Rehan KhanRecommend

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