The ADB feels that with the worsening balance of payments position, any chances of a recovery are weak at best. PHOT: FILE
It has based this analysis on a number of factors and statistics. According to the ADB, inflation has continued and continues to rise over the past five years, investment inflows have continued to fall, the previous government failed to show any direction in its economic policies and decisions, and the interim government has also failed to show the required initiative in taking effective decisions.
The ADB feels that with the worsening balance of payments position, any chances of a recovery are weak at best.
This is an extreme assessment and while many of its contentions are true, they are also a little unfair. For example, its assessment that the previous government has failed to come up with a solid economic plan or show any direction in its policies is true.
Its assessment that the caretaker set-up has also failed to pick up the pieces is right, but its expectation from the caretaker government is not entirely accurate. The caretaker set-up has come in primarily with the mandate to conduct free and fair elections. Any direction that the economy needs or gets will be dependent on the policies of the incoming government.
A look at the statistics that the ADB mentions — it talks about inflation, for example, and says that it has continued to rise over the past few years — shows that it is not entirely accurate. Inflation did hit highs during the previous government’s tenure but, over the past two years, it has been more or less under control and core inflation, which is based on categories that the number cannot manipulate, has also fallen. It is still on the higher side at a little over nine per cent, but is expected to stabilise this year if not actually fall a bit.
Meanwhile, according to sources, the IMF, in a similar and recent report, has actually said the state of the economy is not half bad. Things then are not as bad as the ADB report projects them to be, and the report should be looked at in comparison with other available indicators.
Published in The Express Tribune, April 14th, 2013.
COMMENTS (4)
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High inflation rate over the 5 years? Inflation is in an all time low in 5 years! Pakistan's last inflation rate was 6%! Some countries have inflation rates of 50%!
Both the ADP and ET ignore the fact that Pakistan's export market is dominated by the very countries you despise - wouldn't take much for the West to say "enough is enough" and just switch to friendlier markets - both India and China would love the business. My guess is that a few months without sales to the West would create mass unemployment, deplete your hard currency, and essentially bankrupt Pakistan placing you in default on every loan obligation. With all due respect to Editor - your rosey economic prediction for Pakistan is overly optimistic.
Is the glass half full or half empty? That is a question one has to ask when talking about on Pakistan economy. your description seems gloomy. What I have read is that DP growth rate remained 3.7%, which is highest in the last three years. The agriculture sector recorded a growth of 3.1 percent against 2.4% last year. The Large Scale Manufacturing growth is 1.1 percent during first nine months of the current financial year as against 1.0 percent last year. The Services sector recorded growth of four percent during the outgoing year. The Survey says despite global slowdown, Pakistan has managed to maintain its exports, which saw phenomenal growth during the year. Remittances remained buoyant and estimated at close to 13 billion dollar, an increase of 16 percent. Current account balance was affected due to sharp increase in oil prices and import of 1.2 million metric tons of fertilizer. Yes, the other half of the glass gives one to get pessimistic. I agree with you, however, that "report should be looked at in comparison with other available indicators."
ADBP is the enemy of Pakistan and it should not be believed. We are a great, rich and powerful country. Bigger army than all of Western Europe and most of S. East Asia. We have more nuclear warheads than most countries except a few. We can afford it all and more, we have the money, dedication and desire to have bombs. When we need money the world would have to give it to us.