The Government remains focused on maintaining macroeconomic stability, growth, mobilizing domestic resources and increasing exports, balanced regional development and providing safety nets for the vulnerable groups. Despite numerous challenges, the economy performed better in 2011-12 than many developed and developing economies. Domestically theeconomy was struck by heavy rains in Sindh and parts of Balochistan costing $ 3.7 billion. Notwithstanding these challenges, the Gross Domestic Product growth this year is estimated at 3.7 percent as compared to 3.0 percent last year.
Despite the global slowdown, Pakistan has managed to maintain its exports during July-April 2012 to last year’s level which saw a phenomenal growth. Remittances remained buoyant and estimated at close to $ 13 billion, an increase of 16 percent. Recessionary trend globally have, however, impacted capital flows to Pakistan. Current account balance was affected due to sharp increase in oil prices and import of 1.2 million metric tons of fertilizer.
Growth and Stablization
The economy is now showing signs of modest recovery. GDP growth for 2011-12 has been estimated 3.7 percent as compared to 3.0 percent in the previous fiscal year 2011. The Agriculture sector recorded a growth of 3.1 percent against 2.4 percent last year. The Large Scale Manufacturing (LSM) growth is 1.1 percent during July-March 2011-12 against 1.0 percent last year. Overall, the commodity producing sectors and especially the Agriculture sector have performed better. The Services sector recorded growth of 4.0 percent in 2011-12.
Foreign Direct Investment stood at $ 668 million during July-April 2011-12 as against $ 1293 million last year. The capital flows were affected because of global financial crunch and euro zone crisis. Oil and Gas Exploration remained the major sector for foreign investors. The share of Oil and Gas Exploration in total FDI during July-April 2011-12 stood at 70 percent.
Workers’s Remittances witnessed a strong growth of 25.8 percent in 2011 over the previous year 2010. During July-April 2011-12, worker’s remittances grew by 20.2 percent at $ 10.9 billion. The buoyancy in remittances is largely attributed to the government’s efforts to divert remittances from informal to formal channel. Data on remittances suggests that the monthly average for the period of July-April 2011-12 stood at $ 1.09 billion compared to $ 0.90 billion during the corresponding period last year. The upsurge in the remittances is attributed to the government’s efforts of redirecting these flows from informal to formal channels.
The Economic Survey of Pakistan 2011-12 is downloadable here.
Pakistan’s foreign exchange reserves amounted to USD 18.24 Billion in FY2011 as compared to USD 16.75 Billion in FY2010. Foreign exchange reserves demonstrated increase by a substantial margin from USD 6.4 Billion in 2001-02 to USD 15.6 Billion in 2006-07; a period when Pakistan’s economy, along with its stock market, was booming with liquidity and investor confidence.
Exports during the fiscal year 2010-11 amounted to USD 24.81 Billion as against USD 19.29 Billion in the fiscal year 2009-10, thereby showing an increase. Imports during the fiscal year 2010-11 amounted to USD 40.41 Billion in comparison to USD 34.71 Billion in the fiscal year 2009-10. Increase in import bill was reflected by the impact of higher global crude oil & commodity prices, in addition to local shortage of food consumption items.
Foreign Direct Investment Net Inflows
Foreign direct investment (FDI) has emerged as a major source of private external flows for developing countries around the globe including Pakistan. FDI plays an important role vis-à-vis technology development, assisting human capital formation, contributing to international trade integration, helping in creating a more competitive business environment and promoting enterprise development. Pakistan recent FDI during 2009-10 of USD 2.15 Billion from USD 1.5 Billion in 2004-05.
However FDI inflows experienced a decline in developing economies in the wake of the global recession since 2007. FDI inflows in Pakistan also declined to USD 1.63 Billion during FY 2010-11, as against USD 2.15 Billion in FY2010.
Pakistan is home to the sixth largest population in the world, estimated at 190 Million in 2012. Pakistan’s young population presents a strong investment case in the form of growing domestic demand. Based on the Labour Force Survey 2011, Pakistan is endowed with a young labour force of 58.4 Million of which 55.1 Million people are employed (18.45 Million in the urban region and 36.72 Million in the rural), compared to 57.2 Million labour force of which 54.0 Million people are employed in 2009-10 (36.7 Million in the rural regions and 17.78 Million in the urban). According to the Economic Survey of Pakistan 2010-11 labour force of 58.4 Million out of which 55.1 Million are employed.
Pakistan is currently facing rural-urban migration causing rapid urbanisation. The urban population comprises 35.8% of the total population in FY2011.
• An estimated 104 Million Pakistani’s, of 66% of the population fall under the age of 25 years.
• The youth literacy rate (age 15-24) is estimated to be 56%
Rise in Per Capita Income
Per capita income has grown at an average rate of 9% per annum during the last five years rising from USD669 in 2003-04 to USD 1,207 in 2010-11.