Pakistan economy in the world

Pakistan owes US$11.3 billion to Paris Club, US$33.1 billion to multilateral donors, US$7.4 billion to International Monetary Fund, and US$12 billion to international bonds such as Eurobond, and sukuk.

Pakistan’s economic growth is expected to reach 1.3 percent in FY2021 and strengthen to an average of 2.7 percent for FY2022-23, according to the Pakistan Development Update the economy of Pakistan is the 22nd largest in the world in terms of purchasing power parity (PPP), and 45th largest in terms of nominal gross domestic product. Pakistan sets 4.8% GDP growth target for 2021/2022 financial year .The IMF is estimating GDP growth for 2020/21 at 1.5%, while the World Bank puts the expected expansion at 1.3%.

Comparatively Brunei (GDP: 2.46%) Brunei is one of the countries with the lowest debt. It has a debt to GDP ratio of 2.46 percent among a population of 439,000 people, which makes it the world’s country with the lowest debt.

Japan, with its population of 127,185,332, has the highest national debt in the world at 234.18% of its GDP, followed by Greece at 181.78%. Japan’s national debt currently sits at ¥1,028 trillion ($9.087 trillion USD).

China’s National Institution for Finance and Development (NFID), a government-linked think tank, put the nation’s overall debt at 270.1 per cent of gross domestic product (GDP) at the end of 2020.Five countries are regarded as the wealthiest countries globally. They are Luxembourg, Norway since the GDP of Norway ranks as the second-largest in the world, Switzerland, Ireland and Iceland. According to a report by the Institute of International Finance in January 2021, China’s outstanding debt claims on the rest of the world increased from about US$1.6 trillion in 2006 to more than US$5.6 trillion as of mid-2020, making China one of the biggest creditors to low-income countries. And, to one’s surprise, China will be the most powerful economy in the world in 2050. But this did not take to come up with this conclusion how bad is it? China’s debt is more than 250 percent of GDP, higher than the United States. It remains lower than Japan, the world’s most indebted leading economy, but some experts say the concern is that China’s debt has surged at the sort of pace that usually leads to a financial bust and economic slump. China is the U.S.’s second-largest foreign creditor, owing more than $1 trillion of U.S. debt. With 1.4 billion people, the world’s second-largest economy and rapid economic growth, China is an undisputed economic powerhouse. Finland has been named as the No 1 country in the world in 2021 for Quality of Life, in 2021 report, while Denmark and Norway are placed second and third, respectively. The World’s Best Countries for Quality of Life, in2021 are United Kingdom and Canada. MOST DANGEROUS COUNTRIES IN THE WORLD are Afghanistan, Central African Republic, Iraq, Libya, Mali, Somalia. South Sudan and Syria. Italy is truly the world’s most beautiful country. It flaunts the most inspiring cultural treasures and magnificent scenery, which you cannot find anywhere in the world. Venice, Florence and Rome with their diverse architecture, Tuscany with its rolling hills, vineyards and snow-peaked mountains will mesmerize you.

Despite myriad of challenges, Pakistan’s economy is moving forward on sustainable growth path on the back of various measures and achievements during the year. Major achievements highlighting the economic performance during FY2021 are mentioned below.

 Pakistan was implementing stabilization policy post crisis of 2017-18 and the economy was recovering from macroeconomic imbalances but COVID-19 slowed down the pace which was recovered initially but the advent of 2nd and 3rd wave brought significant challenges which were met by the timely prudent policies. Pandemics like COVID-19 are once-in-a-century event that devastate global economies. Pakistan did much better in coping up with the pandemic compared to many countries.  Government took several important policy decisions: monetary and fiscal measures, smart lockdowns, rapid vaccination etc. National Command and Operating Centre (NCOC) as a single organization was made responsible to take key decisions in collaboration with the provinces. Situation was put under control due to government’s timely decision making; numbers of daily COVID-19 cases are presently on declining trend.

Prior to COVID-19, the working population was 55.74 million. This number declined to 35.04 million which indicates people either lost their jobs or were not able to work. Due to prudent decisions by the government, working population reached 52.56 million till October, 2020.

Economy has witnessed a V – shaped recovery. The current economic recovery has been achieved without compromising internal and external stability.

Manufacturing has witnessed broad-based growth as major sectors of LSM have shown significant improvement i.e., Textile, Food Beverages & Tobacco, Non-Metallic Mineral Products and Automobile. First nine months of FY2021 recorded highest period wise growth of 8.99 percent since FY2007.

Current account posted a surplus of $ 0.8 billion, during July-April, FY2021 for the first time in 17 years.  Inflows of foreign exchange through the Roshan Digital Account (RDA) crossed the $1 billion mark. During July-April FY2021, workers’ remittances posted historically high growth of 29 percent and reached to $ 24.2 billion.

SBP’s foreign exchange reserves rose to $16 billion, four-years high.  Keeping in view the significant performance pertaining to FATF conditions, potential of exports and e-commerce, Pakistan has been added into the Amazon’s seller list.

 FBR tax collection has witnessed a significant growth of around 18 percent during July-May FY2021 owing to the revival of domestic economic activity and ongoing comprehensive tax policy and administrative reforms. } Primary balance remained in surplus at 1.0 percent of GDP, highest level through the first three quarters in 12 years.  On 27th May 2021, PSX witnessed an all-time high daily trading volume with 2.21 billion shares traded in a single session.

 Due to its impressive growth, Pakistan Stock Exchange earned the title of being the best Asian stock market and fourth best-performing market across the world in 2020.

Profile of domestic debt has improved significantly during the tenure of the present government as short-term debt as percentage of total domestic debt has decreased to 23 percent at end March, 2021 compared with 54 percent at end June, 2018.  Over 80 percent of the net borrowing from domestic sources was through medium to-long term domestic debt instruments (Pakistan Investment Bonds & Government IjaraSukuk) during first nine months of FY2021.

 Pakistan has entered the international capital market after a gap of over three years by successfully raising $ 2.5 billion through Euro bonds.  The policy rate remained unchanged at 7.0 percent which improved business sentiments and thus stimulating economic activities enabling employment to recover.

 During July-February FY2021, the two gas utility companies (SNGPL & SSGCL) have laid 143 Km gas transmission network, 2,616 Km distribution and 886 Km services lines and connected 70 villages/towns to the gas network.

Cellular mobile subscribers (number of active SIMs) in Pakistan have reached 182 million at the end of March, 2021 compared to 167.3 million by the end of June, 2020 showing an increase of 8.6 percent in nine months of FY2021.

The global growth was estimated to contract by 3.3 percent in 2020 with the worst affected economies being the USA (-3.5 percent), UK (-9.9 percent), Japan (-4.8 percent), Germany (-4.9 percent), France (-8.9 percent) and India (-8.0 percent), etc. While China experienced a positive but slowed growth rate of 2.3 percent in 2020, which was below the level seen in 2019. The global economy is expected to rebound in 2021 and 2022, with an expected growth of 6 percent in 2021 and moderate growth of 4.4 percent in 2022.

Pakistan is blessed with natural as well as human resources. Investing in human capital through skill development program will ensure long term inclusive growth and decrease the unemployment rate.

Growth in money supply mainly contributed by Net Foreign Assets (NFA) of the banking system, which increased by Rs 950.2 billion against an expansion of Rs 931.1 billion last year, reflecting an improved balance of payment position. Whereas, Net Domestic Assets (NDA) of the banking system observed an expansion of Rs 714.6 billion during the period under review compared to an expansion of Rs 767.0 billion during same period last year. During the period 1st July-30th April, FY2021, overall private sector credit witnessed an expansion of Rs 454.5 billion against Rs 318.5 billion last year.

The IMF and Pakistan have announced the resumption of stalled $ 6 billion loan program. During the year, all three major credit rating agencies, Moody’s, Fitch and Standard & Poor’s, reaffirmed their sovereign credit Ratings for Pakistan. This reaffirmation is reflective of the sound policies of the Government and of the confidence reposed by these leading international institutions in the country’s economic outlook. Thus, it provides readers with a bird’s eye view of the domestic economic situation, prospects, achievements and challenges across different sectors of the economy during the current fiscal year.

This is happening in spite of bad governance of the government and high prices that are not in their control and unbearable for the 70% population of Pakistan.