Economic Analysis of Pakistan

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Economy of Pakistan

Overview

Pakistan has been a troubled country ever since inception, it’s bad relations with India as well as being a target of extremism, terrorism and foreign interference hasn’t allowed it to boom in accordance to its full potential. The country’s important strategic location makes it a potential candidate to become the next Asian tiger. The China Pakistan Economic Corridor promises a substantial aid as well as protection from miscreants and trust for investors that Pakistan desperately needs.

An overview of the Pakistan economy is presented below by dividing it into the following :

Real Sector:

Pakistan is the 24th largest economy in the world according to World Bank with a GDP of 285 billion dollars, a GDP growth rate of around 4.7% and GDP per capita of $1428 in 2015. The growth rate has been performing better since the past 8 years. According to the government this could have been better if the crop production which a major export item did not face a loss of 28% as a result of which the economic growth fell by 0.5%.  

It is home to 188 million Pakistanis with a population growth rate of approximately 2% per year. This is the 6th most populous country in the world with 35% of the population between 0-14 years of age. 60% between 15-64 and 4.492% above 64 years of age.

The average inflation during 2008-20013 had been around 12%. During 2015-2016 this fell down to around 2.84% which is the lowest in this decade. While it is projected as the revival of growth without the rise in prices. There is a major contribution to the decline in oil prices globally as well. The highest inflation in the past have been 26% during 1974 after the war with India and 20% in 2008 because of the global recession.

The total Labor force in Pakistan accounts for 65 million people (2014) which has been increasing steadily ever since 1990 (See Exhibit 1). According to Pakistan Bureau of Labor statistics the Percentage of total labor force employed in construction sector is around 7.33% (2015) which has fallen down from a previous 7.44% (2012). Unemployment stands at 5.2% of the total labor force.

Pakistan’s exports account for 10.946% of GDP these are around $18.2 billion(2015-16) which has fallen down 11% from a previous amount of $20.5 billion (2012-13). Global commodity prices can be accounted the main reason in decline of this figure. The Imports account for around 17% of GDP, amounting to $32.7 billion (2015-16) from a previous $33 billion (2012-13). The reduction in oil prices accounted for around 40% savings in the import bill however the savings were directed to importing machinery and raw materials for industrial use which is an indication of economic investment for Pakistan.