2. Contents of The Presentation
What is Economy?
The Type of Economies in a Country.
The Economy of Pakistan.
Dependence Factors of Our Economy.
The Crises in Economy Over the Past Few Years.
Factors Behind The Crises.
The Foreign Exchange Reserves.
Economic Comparison 0f 1999 – 2008.
Economic Comparison 0f 2010 – 2018.
Economic Analysis of 2019.
The Current Economic Crises.
The Solution to Economic Crises of Pakistan
13. Economy?
Producers Consumers
Needs Money Needs Products
Market
Economy
It’s Up to Them!
Command
Economy
Traditional
Economy
It’s Up to The Government!
It’s Up to Grandma!
ASSIGN THEIR OWN PRICES! WILLINGNESS TO PAY!
ECONOMICS
Production Distribution Consumption
Macro-Economics Micro-Economics
Deals With Individual
Consumer and Firms
Analyses Aggregates!
e.g. GDP
Total Dollar Value of
Everything An
Economy Produces!
15. Economy of Pakistan
o The economy of Pakistan is the 27th largest economy in the world
in terms of purchasing power, and the 45th largest in absolute
dollar terms.
o Pakistan has a semi-industrialized economy, which mainly
encompasses textiles, chemicals, food processing, agriculture and
other industries.
16. Food and Alcoholic
Beverages
35%
Water, Electricity,
Fuels
29%
Cloothing and Foot
Wear
8%
Transport
7%
Household
Equipments
4%
Education
4%
Communication
3%
Health
2%
Recreation and
Culture
8%
Economy of Pakistan
17. o Pakistan’s economy is on a downward spiral for the past couple of
years.
o From the country’s massive debts and corruption to
unemployment, inflation and widening fiscal deficit.
Economy of Pakistan
The Crisis In Economy Over The Years
Financial Situation: The government’s total
budget > total recipient during the fiscal
year.
18. Effective tax collection practices.
Currently, only one percent of Pakistanis pay their taxes and the
country has one of the lowest tax-to-GDP ratios in the world.
Economy of Pakistan
The Factors Behind the Crisis
Internal political disputes
A Fast growing population
Mixed levels of foreign investment
Confrontation with India.
Inflation. ( more than 9% in 2005 and 7.9% in 2006)
Load-shedding has destroyed industrial growth in Pakistan.
19. Economy of Pakistan
Foreign Exchange Reserves
By October 2007, at the end of Prime Minister Shaukat Aziz’s
tenure, Pakistan raised back its Foreign Reserves to $16.4 billion.
But On October 11, 2008 State Bank of Pakistan reported that
country's foreign exchange reserves had gone Down by $571.9
Million to $7749.7 Million.
The foreign exchange reserves had declined more by $10 billion to
an alarming rate of $6.59 billion.
20. YEAR HIGHEST
DATE RATE (PKR)
1995 30.930
1996
1997 40.185
1998 44.550
1999 51.90
2000 53.648
2001 61.927
2002 59.723
2003 57.752
2004 58.000
2007 Aug 05 60.75
2008 Oct 10 80.00
Economy of Pakistan
Pkr Per US Dollar 1995-2008
23. Pakistan’s annual inflation rate increased to 11.63% in August of
2018 from 10.34% in July.
It was the highest inflation rate since May of 2012, as prices
advanced faster for food & non-alcoholic beverages (10.68 pct vs
7.88 pct in July); transport (15.26 pct vs 14.67 pct); clothing &
footwear (8.51 pct vs 7.40 pct); furniture & household equipment
(10.66 pct vs 10.17 pct); education (7.05 pct vs 6.91 pct);
miscellaneous goods & services (14.42 pct vs 11.57 pct).
On a monthly basis, consumer prices increased 1.38 percent, after
rising 2.29 percent in July.
Economy of Pakistan
25. While looking at 2019 survey, Pakistan’s annual inflation rate
increased to 12.28 percent in November of 2019 from 11.08
percent in the previous month.
Prices advanced faster for food & non-alcoholic beverages (16.53
percent vs 13.10 percent in October); clothing & footwear (10.11
percent vs 9.18 percent); education (5.83 percent vs 4.83
percent), and communication (1.68 percent vs 1.62 percent) On a
monthly basis, consumer prices went up 1.20 percent, following a
1.0 percent gain in the previous month.
Economy of Pakistan
Economic Analyses of 2019 Survey
26. Economy of Pakistan
The Important Issues Facing the Economy:
There was a time when security and terrorism was the prime
concern but thanks to the security forces for controlling the
terrorism.
High Interest Rates Fear of NAB and FBRInflation
The Current Economy Crises
27. Economy of Pakistan
The Current Economy Crises
The Issues of The Business Community:
Business community and business leaders are not comfortable
with the economic situation of the country.
There are some areas which are of great concern for the business
community and they are continuously raising voice against that.
Business community is willing to invest in the country but they
are reluctant because of high cost of doing business, governance
and management related matters.
28. Economy of Pakistan
The Current Economy Crises
The current government is struggling to stabilize the economy.
Almost all financial indicators have seen a downward trend.
The growth rate fell by almost 50 percent from 6.2% to 3.3% -
expected to go down even further to 2.4% next year, which will
be the country's lowest in the past 10 years.
The Pakistani rupee has lost a fifth of its value against the dollar
since the beginning of this fiscal year.
Inflation is expected to hover around 13 percent over the next 12
months, reaching a 10-year-high as well.
29. Economy of Pakistan
The Current Economy Crises
The Ever-increasing debt - which eats up some 30 percent of the
budget every year.
Pakistan continues to take out loans to be able to cover
repayments of past borrowing.
The Government recently signed yet another deal with the
International Monetary Fund (IMF) for a bailout package worth $6
Billion.
30. Economy of Pakistan
The Current Economy Crises
After budget presentation, Prime Minister Imran
Khan announced the creation of a special commission to
investigate why the country has so much debt.
But
But Khan does not need to look any further than the budget
unveiled by his own government to see where the problem lies:
The country has low sources of revenues and high non-
development expenditures, which is a recipe for a financial
disaster.
31. Economy of Pakistan
The Current Economy Crises
Khan promised to crack down on tax evasion and corruption
before coming to power but little has been done so far.
The tax burden in Pakistan falls overwhelmingly on the poor who
pay in various indirect ways and who already struggle to make
ends meet.
Currently, a third of the nation is living below the poverty line.
32. Economy of Pakistan
The Solution to Economy Crises
At this point, those in power and those who enjoy economic
privileges must realize that this status quo is unsustainable.
The only way out is to implement a just tax system along with a
cut or at least a freeze on the ever-increasing military budget.
If Pakistan is to avoid the looming economic disaster, it must
revise current spending and prioritize expenditures that will
actually generate social and economic development and uplift the
poor, not just the civilian and military elites
33. Economy of Pakistan
The Solution to Economy Crises
All critical indicators show that Pakistan is approaching to
recession and in this situation one thing that can be done is to
reduce interest rates.
Interest Rates Promote SMEs
Allow Local Business Houses to Invest
Improving Policies for Business Sector
Control Smuggling