Home Articles Year of 2018 with Oncoming Year for Pakistan i.e. 2019

Year of 2018 with Oncoming Year for Pakistan i.e. 2019


CY 2018 was anticipated by many circles as year of change. But for what, is not yet clear in the minds of common people.

Now analyzing CY 2018 that what we got and what we lost we can move toward CY 2019 with expectations to get them materialized.

CY 2018

Politics:- In the mid of 2018 Imran Khan was sworn in as Pakistan’s 22nd prime minister following the emergence of the PTI as the single-largest party in the parliamentary election on July 25th. The new PTI-led coalition government’s ability to follow through on its electoral promises and stated policy agenda was limited by the country’s weak economic position. An impending IMF program would slow economic growth, increase energy prices and result in further devaluation of the local currency. These were the actual challenges for the new government.

On political front Pakistan saw several events during July to Dec208 that are (1) US secretary of state visited Pakistan in spite of Pak US cool attitude (2) Pakistan’s foreign minister visits to Afghanistan to sort out pending issues (3) Diplomatic outreach to China  Saudi Arabia UAE to seek financial support (4) Speeches by Indian and Pakistani leaders dashing hopes of better ties (5) Parliamentary opposition leaders arrested through NAB and other courts (6) Close contest between PTI and PML (N) at by-elections (7) PM convenes security council meetings (8) Militants attacked Chinese consulate in Karachi (9) Security forces arrested Islamists (10) Opposition plans anti-government demonstrations.

Though it is assumed that results of Elections-2018 were preplanned in control of powerful circles but still they brought some major upsets for the traditional politicians of Pakistan. The pattern of election results indicate that, four categories of politicians have been rejected by the aware masses of Pakistan for the first time in the history of Pakistan.

One; the people of Pakistan have rejected the religious feudalism, the religio-political party leaders, particularly, who have been using the religion for their own political and vested interests, thus to mislead people and defame Pakistan.

The second category includes the political feudalists, the politicians who have been making use of politics to subjugate the people without doing anything for their education and socio-economic development.

The third category of rejected class include; the traditional sub-nationalists, who while enjoying perks and privileges as members of Pakistani parliament (even ministers) have been singing the songs of others countries and those international and regional forces, which never accepted a string and prosperous Pakistan.

The fourth category consists of extremist forces, which have been promoting radicalization and extremism among masses under the cover of religion and sects and now decided to assume a political role for proliferation of their ideologies into societies.

The rising awareness among the masses owes a lot to rapidly expanding media and education in the remote areas of Pakistan. Indeed, the youth of Pakistan has a major contribution towards this change, which is being seen as a ray of hope for the future of Pakistan. Today Pakistan is facing a number of challenges; the worst economic crisis of the history, the socio-political divide, international isolation and above all, the massive unemployment. These issues are going to be a huge challenge for the new government and the masses to bear the hardships. There have been no institutional building and corruption has been rampant at the level of government institutions and the society.

Economy :- The economy of Pakistan is the 23th largest in the world in terms of purchasing power parity (PPP), and 42nd largest in terms of nominal gross domestic product. Pakistan has a population of over 207 million  (the world’s 5th-largest), giving it a nominal GDP per capita of $1,641 in 2018, which ranks 147th in the world and giving it s PPP GDP per capita of 5,709 in 2018, which ranks 130th in the world for 2018. However, Pakistan’s undocumented economy is estimated to be 36% of its overall economy, which is not taken into consideration when calculating per capita income. Pakistan is a developing country and is one of the Next Eleven countries identified by Jim O’Neill in a research paper as having a high potential of becoming, along with the BRICS countries, among the world’s largest economies in the 21st century. The economy is semi-industrialized, with centers of growth along the Indus River. Primary export commodities include textiles, leather goods, sports goods, chemicals, carpets/rugs and medical instruments.

Government sector is mostly contributing in employment and according to estimate 4.5 million people are employed by federal, provincial and local governments in different sectors from Armed forces to education and health.

Agriculture accounts for about 53% of GDP in 1947. While per-capita agricultural output has grown since then, it has been outpaced by the growth of the non-agricultural sectors, and the share of agriculture has dropped to roughly one-fifth of Pakistan’s economy.

In recent years, the country has seen rapid growth in industries (such as apparel, textiles, and cement) and services (such as telecommunications, transportation, advertising, and finance).

Agriculture in 2018 now contributes about 18.9% percent of Gross Domestic Product (GDP) and accounts for 42.3% of employed labor force and is the largest source of foreign exchange earnings. During 2017-18, agriculture sector recorded a remarkable growth of 3.81 percent and surpassed its targeted growth of 3.5 percent and last year’s growth of 2.07 percent. All the major crops showed a positive trend in their production except maize. Sugarcane and rice production surpassed their historic level with 82.1 and 7.4 million tons respectively. Pakistan Bureau of Statistics provisionally valued this sector at Rs. 7,764,218 million for the year 2018 thus registering the growth of 6.1% over the last year.

Pakistan’s industrial sector accounts for about 20.9% of GDP. In 2018 it recorded a growth of 5.80% as compared to the growth of 5.43% last year. Manufacturing is the most vibrant sub sector of the industrial sector having 64.8% contribution in the industrial sector and in GDP it accounts for 13.6%. Manufacturing sub-sector is further divided in three components including large-scale manufacturing (LSM) with the share of 79.6% percent in manufacturing sector, small scale manufacturing share is 13.8 percent in manufacturing sector, while slaughtering contributes 6.5 percent in the manufacturing. Major sectors in industries include cement, fertilizer, edible oil, sugar, steel, tobacco, chemicals, machinery, food processing and medical instruments, primarily surgical. Pakistan is one of the largest manufacturers and exporters of surgical instruments.

The World Bank (WB) and International Finance Corporation’s flagship report, “Ease of Doing Business Index 2019” ranked Pakistan 136 among 190 countries around the globe, indicating a continuous improvement and taking a jump from 147 last year. The top five countries were New Zealand, Singapore, Denmark, Hong Kong and Korea.

Most of the Textile Industry is established in Punjab. Before 1990, the situation was different; most of the industry was in Karachi. Textile industry in Pakistan is traditional and conservative, producing and exporting most of low cost raw articles e.g. Raw Cotton, Yarn, fabric etc. Share of finished goods and branded articles is nominal. Pakistan has a potential to quadruple its textile production and export, due to emerging Chinese markets and with its existing infrastructure. 10% of United States imports regarding clothing and other form of textiles is covered by Pakistan.

As of 2010, Pakistan was one of the largest users of CNG (compressed natural gas) in the world. Presently, more than 3,000 CNG stations are operating in the country in 99 cities and towns, and 1000 more would be set up in the next two years. It has provided employment to over 50,000 people in Pakistan, but the CNG industry is struggling to survive since 2013. Pakistan services sector accounts for about 60.2% of GDP. Transport, storage, communications, finance, and insurance account for 24% of this sector, and wholesale and retail trade about 30%. Pakistan is trying to promote the information industry and other modern service industries through incentives such as long-term tax holidays.

The newly elected government in 2018 is now trying to negotiate with IMF in a yes or no stance for a three-year $6.0 billion package which would allow it to deal with on-going debt issues. China–Pakistan Economic Corridor is also being developed with $46 billion of Chinese loans and grants.

The remittances of Pakistanis living abroad has played important role in Pakistan’s economy and foreign exchange reserves. The Pakistanis settled in Western Europe and North America are important sources of remittances to Pakistan. Since 1973 the Pakistani workers in the oil rich Arab states have been sources of billions of dollars of remittances.

The 9 million-strong Pakistani diaspora, contributed US$19.3 billion to the economy in FY2017 and $19.6 billion in 2018. The major source countries of remittances to Pakistan include UAE, US, Saudi Arabia, GCC countries (including Bahrain, Kuwait, Qatar and Oman), Australia, Canada, Japan, UK and EU countries like Norway and Switzerland.

CY 2019

Politics: – Plato once said, “The state is what it is because its citizens are what they are. We need not expect to have better states until we have better men”. His observations represent eternal truth about matters pertaining to governance of states and how the states and societies inhabiting within the boundaries of the states are transformed into better entities.

It is said that there are two kinds of leaders, those who create history and those who are catapulted to that position by historic circumstances. The political landscape has been marred by unrelenting efforts by the elite and governing classes to build their own fortunes through corruption and misuse of their power, instead of delivering to the masses who are the real sovereigns of the country. The situation would continue as such in 2019 making Imran Khan to walk on a tightrope.

The opposition mostly of PPP and PML N would remain under stress mostly due to decisions from the judiciary but they would hesitate and most likely not come on roads.

Chief Justice Mian Saqib Nisar would retire on January 16, 2019, after attaining the superannuation age of 65. After that, Justice Asif Saeed Khosa will come in to serve as top judge for almost 11 months. He will superannuate on December 20, 2019. Justice Gulzar Ahmed will be the next chief justice, who will hold the office for more than two years till February 2, 2022. Hence in 2019 it would be a question that in what form judicial activism would continue. Chief of Army Staff (COAS) Gen Qamar Javed Bajwa would also retire on 29 Nov 2019, whether he seeks or gets extension is also a question for 2019.

In regards to fixing the maladies afflicting the political and economic landscape of the country, the PTI government has shown a sense of urgency commensurate with its commitments and a number of committees and task forces have been formed to deal with those issues. However there is a danger in 2019 that hastily taken steps can turn in to a boomerang effect. People have given Imran a mandate for five years. He must take all steps in 2019 with utmost caution and after thorough deliberation. Though people have high hopes and expect miracles but they would still be willing to give him time to redeem his pledges. By using Bilawal and Maryam and Hamza, PPP and PML N can again gain some strength. Sanam Bhutto entry in the scene may also add up to the strength.

Some insiders would obstruct Imran Khan Path and many of his own companions belong to these interests. There are other centers of power which have their own axe to grind and would like to retain their position of ascendency in determining which course the county takes. Prime Minister Imran Khan is lucky that he enjoys the full backing of the establishment and in his own words there is no issue of civil-military imbalance but how far, this question would remain main question of 2019.

Economy: – IMF has projected an increase in the inflation rate for Pakistan to 7.5 percent (from 3.9 percent in 2018) and revised GDP growth rate downward to 4 percent in 2019 (from 5.8 percent in 2018). But with depreciation of PKR, inflation can cross 10%.in 2019

However, macroeconomic stability would go on eroding, putting the outlook at risk. Growth is expected to moderate to 4.0 percent in 2019, and slow to about 3.0 percent in the medium term till 2023.

The unemployment ratio for Pakistan would remain from 6 percent in 2017 to 6.1 percent in 2018 and 6.1 percent in 2019. The current account balance is forecasted at negative 5.3 percent for 2019 compared to negative 4.1 percent for 2017 and negative 5.9 percent in 2018 respectively.

The deteriorating economic situation would compel the new government to move back to reforms-attached loan program of Bretton Woods’s financial institution to plug holes in the widening current account balance. The current account deficit has already widened 10 percent year-on-year to $2.7 billion in the July-August period of FY2019, mainly due to swelling trade deficit.

The central bank has raised the key policy rate by cumulative 150 basis points to 10 percent in Nov 2018 to contain demand pressure and tame inflation. This can cross 12% and can touch 14% even.

Pakistan’s remittances are likely not to increase from the point they were last year; whereas other countries of South Asian regions such as Bangladesh and India would see an 18% and 28% rise in the same period, respectively.

The international financial institutions say that the country would allow depreciation of its currency further that has already hit the lowest ebb of Rs 140 in the month of Dec 2018.

It is noted that the country’s foreign reserves have also significantly reduced, down to just one and a half months of imports by the end of September, largely due to a weak macroeconomic situation.

“Budget deficits in South Asia are among the highest in the world, and this could be storing up trouble for the future,” says World Bank as most South Asian countries [including Pakistan] generate low tax revenue, which leads to having large budget deficits, which worsens due to economic shocks and election cycles. Despite all the odds, the South Asian region is set to accelerate its growth rate to 7.1 per cent in FY19 not in case of Pakistan and would be the world’s fastest-growing region, WB’s report says.

With improvement in ease of doing business ranking and giving an investment friendly road map from government, many new auto sector giants like France’s Renault, South Korean’s Hyundai and Kia, Chinese JW Forland and German auto giant Volkswagen may step up in Pakistan auto market through joint ventures with local manufacturers like Dewan Farooque Motors, Khalid Mushtaq Motors and United Motors.

US oil and gas giant Exxon Mobil may again return to Pakistan after nearly three decades gap with initial survey showing a potential of huge hydrocarbon reserves discovery at offshore.

With recent agreement from Saudi Arabia to invest more than US dollar 15 billion in establishing a mega oil refinery and petrochemical industry in Gwadar more commitments for investments are on their way to come in this sector especially from UAE, Qatar, Malaysia and Italy. But this all depends on PTI government that how much they can keep the political environment cool.

Economic indicators of Pakistan (2017–2018 with forecasts for 2019)

  2017 2018 2019 (Forecasts)
Gross domestic product (GDP)(Billion Rupees) 31,962.6 34,396.5
Gross domestic product (GDP) US $ in billions 304.7 309.7 320-330
Real GDP growth rate 5.37% 5.79% 3-4%
Industrial sector growth rate 5.43% 5.80%
Large Scale Manufacturing growth rate  5.62% 6.13%
Small Scale Manufacturing growth rate 8.15% 8.18%
Agriculture sector growth rate 2.07% 3.81% 2.5-3.0
Commodity producing sector growth rate 3.79% 4.84%
Service sector growth rate 6.46% 6.43% 6.4-6.5
Per capita income (US dollars) 1632.1 1640.5  


Consumer Price index growth rate  (inflation) 4.2%  3.8% 8-10%
Government total revenues (billion rupees) 4936.7 5228.0  


Total tax revenue (billion rupees) 3969.2 4467.2
FBR tax collection (billion rupees) 3367.9 3842.1 4000-4500
Government total expenditures(billion rupees) 6800.5 7488.4 7500-8000
Total revenues as % of GDP
15.5% 15.2%
Tax revenue as % of GDP 12.4% 13.0% 13.5%
Total expenditures as % of GDP 21.3% 21.8% 22-23%
Fiscal Deficit as % of GDP 5.8% 6.6% 7.0%
Current account in (million dollars) -12,621 -18,130 -19,000
Total Public Debt (Billion Rupees) 21,785.5 25,574.1
Total Public Debt as % of GDP 68.2%  74.4% 75%
Total External Debt (Billion US $) 83.5 95.3 95-96
Foreign exchange reserves SBP + Scheduled Banks (Billion US Dollars) 21.4  16.4  


Foreign direct investment (Million US Dollars) 2746.8 3092.0  


PSE100 index growth rate  27.5 -7.1%
USD to PKR exchange rates 109.8444 140.0 150.0-160.0
Exports of Pakistan (billion US dollars) 22.003 24.824
Imports of Pakistan (billion US dollar) 48.683 56.002
Trade deficit (billion US dollars) 26.680 31.178 30.0-35.0
Workers’ remittances(billion US dollars )  19.3 19.6 19.0


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