The world might be seeing signs of life in the global economy, as said by Jenifer Blake, chief economist, World Economic Forum; but, no glimmer of relief from the improvement hailed Pakistans standing in front of the world. The country ranks the lowest amongst SAARC peers on the latest Global Competitiveness Index (2013-14).
Ironically, countrys performance received the biggest shock against some of the most basic and critical areas of competitiveness, sliding down nine notches from its last years global ranking.
A look back at historical rankings and it is no surprise that the performance of the country diminished constantly due to weaknesses in policy stability and law-and-order situation in the country.
The security situation of Karachi, the countrys economic hub, is a testament to whats on the paper! Digging into the data details shows that corruption is considered as one of the biggest hurdles in doing business in the country followed by policy instability, access to finance, inadequate infrastructure, ineffective bureaucracy, inflation, crime and theft!!
The institutional side bears weakness due to alarming rates of organized crimes as well as exacerbating business cost of terrorism, crime and violence. Inadequate diversion of public funds with higher wastefulness of government spending has wrecked havoc on the institutional capacity of the country. Similarly, lack of legal framework with the rampant SRO culture is yet another bottleneck in capacity building.
On the infrastructure side, none is hidden from the mockery. Be it the airlines, the railway or the other amenities like power supply, poor quality and the lack thereof exert immense pressure on the countrys competitiveness.
Things on the macroeconomic pillar are also not that rosy; sub-indicators reveal that collapsing government budget further into negative, diminishing share of national savings and increasing government debt as a percentage of GDP have all contributed to the countrys shaken macroeconomic environment.
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GLOBAL COMPETITIVENESS INDEX
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South Asia GCI 2013 GCI 2012 Change
-2014 -2013
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India 60 59 -1
Sri Lanka 65 68 3
Bhutan 109 N/A* N/A*
Bangladesh 110 118 8
Nepal 117 125 8
Pakistan 133 124 -9
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Latest addition to the ranking list
Source: The Global Competitiveness Report 2013-2014 - WEF
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Paksitan: Selected Economic Indicators
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Baseline Program Comments
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Real GDP at factor cost growth (%) 3.3 2.5 Running tight fiscal and monetary policies will
Consumer prices (period average) growth (%) 8.8 7.9 compromise growth - tough political economic decision
Strict NFA and NDA targets alongwith reign on note printing
Consumer prices (end of period) growth (%) 10.5 10 will result in subdued inflation, although
year average seems too optimistic considering tariff
Gross saving (% of GDP) 12.5 14.3 rationalisation and new gas levy
Government (% of GDP) -4.5 -2.2 There is some hope to spur investment by reducing deficit
Revenue & grants (% of GDP) 13 14.4 Some stringent measures to be announced to enhance revenue,
plus higher grants to be disbursed with IMFs nod
Expenditure (% of GDP) 20.8 19.9 The idea is to do away with subsidies by restructuring PSE5
Budget balance (including grants) (% of GDP) -7.8 -5.5 Too ambitious target. Compromised growth is the repercussion.
Primary balance (% of GDP) -3 -0.9 Good in the long run
Total general government debt (% of GDP) 69.2 66.6 Lower deficit means less burden on debt - good omen
Net foreign assets growth (%) -0.7 3.9 This implies some higher programme loans by other multilateral
agencies after acceptance by the Fund
Net domestic assets growth (%) 18.4 12.2 Restricting government borrowing as Fund expects less deficit and
Broad money growth (%) 17.7 13.8 expects government to rely a bit on
Reserve money growth (%) 14.2 13.4 non-banking channels. This will lower inflation and give some room
Private credit growth (/o) 8 8.5 Some boost in exports and lower imports expected as currency may
depreciate along with higher interest rates
for private credit growth to curb domestic demand
Exports growth (%) 9.6 11.4 A healthy amount is anticipated by other multilateral agencies along with IM
Imports growth (%) 7.3 6.9 money and that may help attract
Current account balance (% of GDP) -1.6 -0.6 some foreign investment to flow in as well
REER -4 8 77 Currency is expected to be at RsllO/USD with the program
Gross reserves ($ mn) 2283 9566 as against Rs108/USD without it
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GDP at market price (Rs bn) 25415 25351
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GDP at market price ($ bn) 235.6 229.9
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