As the government gets ready to present its third annual budget (2010-2011), reports and estimates for the next fiscal year is the talk of the day for economists and politicians in Pakistan.
Besides all the buzz created by media commentary and the editorials, which is mostly negative, Pakistan’s economy is said to be stabilizing for which there is very tangible evidence. Most of which were presented in the latest economic survey report.
The economic report has showed stability in today’s economic indicators compared to last few years’. Some of those indicators presented in the Economic Survey (2009-2010) are as listed below.
The economy grew by 4.1% during 2009-10 after a modest growth of 1.2 % in 2008-09. The industrial output expanded by 4.9 %, with Large Scale Manufacturing posting a 4.4 % rate of growth. The services sector grew by 4.6 % as compared to 1.6 % in 2008-09. For 2009-10, the fiscal deficit is aimed to be kept in check at 5.1 % of GDP, despite the absorption of larger-than-budgeted security-related spending. The external current account deficit was contained to 5.6 % of GDP (US$9.3 billion) in 2008-09 from a high of 8.3 % of GDP in 2007-08 (US$13.9 billion). The current deficit is expected to decline to under 3 % of GDP in the current year. Foreign exchange reserves have been rebuilt to nearly US$15 billion, from their low of under US$6 billion in October 2008. Inflation declined from 25 % in October 2008 to a recent low of 8.9 % in October 2009, though it has accelerated sharply of recent and is showing persistence. The total installed electricity generation capacity has increased to 20,190 MW during July-March 2009-10 from 19,780 MW during the same period of last year The number of villages electrified increased to 147,038 by March 2010 from 133,463 by March 2009, showing an increase of 10 %. Overall exports recorded a positive growth of 8% during the first ten months (July-April) of the current year against a decline of 3% in the same period last year. Trade deficit improved by 13.9% from $14,218 million in July-April 2008-09 to $12,238 million during July-April 2009-10. Social safety nets have been strengthened. Benazir Income Support Program is being streamlined. Pro-poor spending is significantly rising over recent years 2009-10 started with a recovery in the Capital Markets following the global financial crisis. The KSE-100 Index crossed the 10,000 points barrier on 12th March, 2010, however it could not be sustained. Net inflow of foreign investment in Pakistan from July 2009 to March 2010 was US$431.9 million which was a large increase considering the negative foreign portfolio investment in the last financial year.
While projecting Pakistan’s economic future, by analyzing the next budget, these figures should be kept in mind . As these reflect the present foundations which can undermining any skepticism about the future of Pakistan’s economy and what the next budget is capable of delivering.