Economy of Pakistan Appears in Extreme Danger - 14 indicators 3
Abdullah Ali Abbasihttps://abdullahaliabbasi.com
Abdullah Ali Abbasi is an Engineer by profession and a blogger by passion.
  1. Dear Hard Hour
    I do not know your organisation and who stands behind your survey, but with all the Data and the situation of Pakistan, you forgot to mention few things that have happened in the last 12 months.

    1, First of all, even his enemies admit that Imran Khan is an honest, un-corruptible, smart, intelligent and hard-working politician. He works 18 hours a day and has introduced a culture of punctuality and seriousness in his ministers.
    2. After taking office, he cut down on all un-necessary expenditures in PM House, ministries and ordered to save money. That has resulted in saving billions.
    3. He has put in place a new system of public and state relations. Anyone can call a central office to register his or her complaint.
    4. Has instituted special office for 10 million Expat Pakistanis who can complain and get their case tackled by one department.
    5. A new office has been installed for foreign investment that would cut corruption and bribery to officials. PM office is dealing with it directly. The real investment has increased 23% in one year.
    6. When Imran Khan took over, he discovered that previous governments of Nawaz Sharif and Zardari have left a budget deficit of 30000 Billion and plundered the treasury and money laundered nearly 20 billion dollars outside Pakistan. That money is being found and started getting returned.
    7. In 12 months, he has stabilized Pakistan economy and now it is on the right part.
    8. Imran Khan has launched a campaign to plant 10 billion trees in 5 years. He is the first PM who is environmentally conscious.
    9. New policies about visa, passport and National cards are introduced
    10. His government has started building new dams so that water shortages can be tackled in the future.
    11. Under Imran Khan’s instructions, Railway system is being revamped. 22 New rail routes have been started in various parts of Pakistan.
    12. The tribal area of North Pakistan has been given extra funds to improve infra- structures, schools, employment etc.
    14. Thousands of religious schools have been incorporated in to Public school system and their education would be both religious and normal.
    15. Have improved friendly relations with Middle East, Europe, USA and other countries
    16. He has taken personal charge to bring the Kashmir issue to UN and other centres powers.
    Last but not least, Imran Khan has tried to improve relations with India, but RSS inspired Modi is not interested in good relations with Pakistan. Modi’s BJP sardar only wants to dictate its will on Pakistan. That is no go with 220 million Pakistan and especially a proud Pathan leader like Imran Khan.
    I hope that this short description satisfied your need to know.
    Kind regards

The economy of Pakistan is the most widely discussed topic in history and especially in the current situation of Pakistan. Also, it is a hot topic in other International business communities who are engaged in matters with Pakistan.
In the meanwhile, it’s the most widely manipulated and falsely projected topic in the news media industry, especially when we talk about local news production units.
You just have landed at the right spot to take a look at the report on the economy of Pakistan formulated by a politically and economically unbiased writer.

How To Improve Economy Of Pakistan

Economy of Pakistan Appears in Extreme Danger - 14 indicators 1
Economy Of Pakistan

Democracy & Policy Sustenance

So the first thing on my mind about the things related to my blog on the economy of Pakistan is democracy and policy sustenance. No one on the Earth wants his money to go in vain. Every investor wants to double triple and quadruple his investments.
In this world of today, democracy is the best answer to economic security and a solution to all obstacles. It is considered a positive indicator, and it is, as it allows openness and favorable conditions. Democracy gives a feeling of safety and freedom.
An investor should be confident that before any policy shift, the government is going to recognize and address the concerns of the investors and other business-person. Whereas, in a dictatorship, the governing bodies enforce their will and always win, either by hook or by crook.
It is also worth mentioning that in a democracy, no policy change takes place as quickly as compared to a non-democratic political environment. And if it’s not considering the will of people fully, it isn’t a democracy anymore. We have seen that economies that aren’t reliant on abundant natural resources only grow when there is democracy around.
The claims made here can have supportive documentary or statistical shreds of evidence. Sustenance of policies gives a helping hand to the business ventures. Any changes in plans, a business person can comply with, in a reasonable amount of time as it holds less uncertainty and is market and consumer-oriented in an ideal democracy.

The so-called best of the democracies around the globe are thriving to achieve the supremacy of people. However, the economy of Pakistan is also thriving to accomplish any such favor since its creation.

Entrepreneurship Vs Job Culture

Pakistan is very unfortunate for the reason that the country is far behind in producing any notable entrepreneurs. The sad fact is that educational institutions hardly talk about the subject. The market is under the influence of few. People who are from the influential families of Pakistan had been working for the continuation and survival of status-quo for the known recent history.
The filth upon filth is that these people are prominent enough to control the governments. Since we are a nation of consumers, none of our countrymen can manufacture machines, and hence the products. We are a nation of raw-material sellers. The said situations make our workers work hard and earn nominal daily wages. 

They make use of their influence in the education sector, and one can understand why the educational standards and course syllabus are not improving.
Our educational institutions do not teach us any law books either, which are more important than history books, and in history books, we have to memorize just dates and names. And the public is suffering because they don’t know their rights and they don’t know the law itself.

Peace And Security

The Peace of mind and the feeling of security embarks changes in society. No society or economy can sustain its growth in a complicated law and order situation.
As the investor has to calibrate safe and secure environment for its business ventures, the Peace of mind and security of his valued property, rights, and goods, dramatically affects his decisions about his future investments. However, apart from the interest of the investor in investing is secondary when it comes to the revenue generation of the same.
No one is going to invest in an insecure environment. Two factors i-e Peace and Security play a vital role in the development of a situation where the economy or the business can embrace improvements.
We as a state should understand Peace and Security in consonance to the democracy and sustenance of the policies of a country.
Pakistan will have to tackle the political uncertainty in order to attract investment and improve businesses. And only political stability can ensure long-lasting, and unarguable Peace.
The political unrest and the supremacy of non-productive sectors/sections of society should be dealt against strictly.

The protests should not be allowed to cease business activities. An economic emergency should be implemented to cater to the drowning economy.

TriA

Legislation For The Improvement Of Economy

The next thing on the list as a remedy to the drowning economy of Pakistan is proper legislation. Without adequate legislation, It is impossible to drive the economy to its max.
Appropriate legislation is also necessary to quench the fruitful outcomes of a thriving economy to the middle-class, lower middle class, and deprived of the country. As a mentally sound and stable nation can play well in the race of global economies.
A country can only progress when the majority of its people who are obviously from the middle class are adequately participating in the growth of an economy. The growth of an economy calibrates by the living standards of the majority-class of any population.
Ranting about the betterment of the economy without any proper legislation is to create a hoax. And it has no impact on the economy, which is already struggling and severely under debt.
As per proper legislation, there needs to be an Organisational structure to handle businesses on a national level like SECP in our case. The bureaucracy should be set free from fear, and the governmental pressure and with accountability, institutions should back them and empower them.

The government should immediately introduce legislation that can partake complex and tangible economic growth.
– Import-export laws need improvement. The handling of legal and technical aspects also need legislative support and improved human resources.
– Custom Laws need attention as they are too old to deal with the 21st-century business.
– Tax laws should be made clear with loop-holes removal.

No Smuggling For Prosperous Pakistan

Before taking a discussion on the economy any further, It is necessary to indicate critical factors that are tipping the scale of the economy towards drowning.
Due to Smuggling, Pakistan faces a set back every year of millions of dollars, in terms of tax collection and money laundering.
Goods we often sell in the international market, and when they run short in the local market, the same goods we repurchase to make trillion.
It is well-known that with the Iranian border due to the Smuggling of oil and petroleum products, we lose millions every year.
Pakistan loses millions in terms of tax collection and illegal money transfer i-e money laundering.
It is also well-known that the Smuggling of goods like dry fruits and other items has been taking place over the Afghan border.
Few people are also participating in the Smuggling of stone, marble, quartz, and other expensive materials, and metals.
Smuggling of spare parts and other automobile products is also causing the economy to face severe losses.
Every year we lose millions of rupees in terms of illegally borrowed clothing products from the adjoining countries in the region.
Leave aside the eye-wears, medical equipment, machinery, books, paper, stationery items, house-hold equipment, and fitness products. 
These things need to address on a gradual basis. However, we should avoid a sudden crackdown which may cease the economy of Pakistan.

Implementation of laws

Next to legislation, comes the point of the implementation of laws. Pakistan has already invested in the creation of effective laws but is far behind in its application.
Implementation of laws is not an easy task. To create an environment which embraces the authority of the law, it requires great efforts, education, and strengthening of institutions.
It is required to establish the supremacy of law on a national level, so to make everyone know that the observance of the law is necessary for every citizen.
It is also essential to introduce the feeling inside the heart, conscience, and mind of every citizen that no one is above the law.
Without the implementation of laws, the countries and people have to suffer. And they have to bear the consequences of jungle-type law and order situations for the rest of their lives.

Vision and Intelligence

Vision and intelligence are the two things that play an essential role in the growth of an economy.
Vision is the concept that defines the desires of the business-class or the government of any country for where they want to take their economy. In contrast, intelligence defines the sustainability of the vision. This information plays a vital role in the adoption of techniques necessary to amplify the effect of the changes if any.

When we talk about the vision, it’s evident that it’s not a random thought or brainstorming.
The vision is a flexible, thorough, and complete set of documentation after homework that introduces improvement.
The outcomes of the vision may vary as per the percentage of their effectiveness.
Still, they do not fail as they go through a chain of logical and analytical reasoning under the strict observance and quality assuring surveillance of competent authorities.
Thus, a vision is defined as a replica of intelligence, inevitably bringing a change.

How technology can help economy of Pakistan?

  • We can reduce the chances of tax-evasion.
  • A well-documented economy increases the tax collection.
  • With AI-based funds monitory system, we can reduce corruption.
  • Digitization can help eliminate old businessmen’s filthy yet legal tax-evasion tactics usage.
  • Real-time monitoring of manufactured products/goods can also help locate their usage, requirement and hence sale of excessive eatables.
  • Bad Land-record system and advantage of “law of limitation” usually applies to people who are manipulative in nature. Technology can help fix these giants.
  • A well-informed nation can help eliminate crimes which ultimately hurt their own interests.
  • Future assessment, Market dimensions, and equity-generating-requirements can be well obtained by proper usage of technology.
  • Improvement in health, business, education, information, and locomotion services all play in the benefit of the economy of any nation.

Economic Indicators

In the first step, I would like to mention a fact that there is no precisely accurate indicator to judge any economy 100% correctly. But we can select a few economic indicators which can lead us in exploring the best possible results. These results are nearly equivalent to reality.

Top 10 Economic_indicator

  1. External Debt
  2. Total Exports
  3. Total Imports
  4. Total Investments
  5. Gross Domestic Product (GDP)
  6. Money Supply
  7. Producer Price Index (PPI)
  8. Consumer Price Index (CPI)
  9. Inflation rate (IR)
  10. Employment rate
  11. Housing
  12. Stock Index (SI)
  13. Spending
  14. Confidence

*To read basic definitions scroll to the bottom.

The Economy of a country is under the direct influence of Global-Reputation, Terrorism, Tolerance, Education-level, Peace, Democracy, Global-relations, Civil Rights, Law & Order situation, etc.

TriA

Economy of Pakistan and its Problems:

There is a great connection between GDP (growth) and Debt (loans).

During the last 10 Fiscal Years, the economy of Pakistan embraced many changes. Few broke its spinal cord, whereas, others tried to fix it.

Pakistan External Debt, A 5 Years High.

This government claimed that it would reduce foreign debt. The establishment division was in full support of the current regime and was once appearing critical towards PMLN’s economic policies. However, this sector is also in hot waters.

Economy of Pakistan Appears in Extreme Danger - 14 indicators 2
Pakistan External Debt, A 5 Years High.

Highest Foreign Debt In The History Of Pakistan – POOR

Pakistan Total Export 2020 (Last 5 Years Data)

The government of Imran Khan is claiming that the country is improving its exports by climbing new heights.

Pakistan Total Export 2020 (Last 5 Years)
Pakistan Total Export 2020 (Last 5 Years data)

Lowest Exports In The Recent History Of Pakistan – POOR

Pakistan Imports 2020 (Last 5 Years Comparison)

The economy of Pakistan is also not performing well against this indicator.

Pakistan Imports 2020 (Last 5 Years Comparison)
Pakistan Imports 2020 (Last 5 Years Comparison)

No improvement in this sector of economy – POOR

Investments In Pakistan, Last 5 Years (percentage of GDP)

There is a massive drop in the investments made in Pakistan for the current fiscal year, even though the government tried to mislead the nation by running fake media campaigns.

Investments In Pakistan, Last 5 Years (percentage of GDP)
Investments In Pakistan, Last 5 Years (percentage of GDP)

This looks like a chaotic situationPOOR

Real GDP Of Pakistan 2020, 5 years lowest.

Max GDP of Pakistan during the last decade = 5.79 (2017) Healthy

Minimum GDP of Pakistan during the last decade = 2.58 (2010) Weak

GDP OF PAKISTAN 2019 = 3.30 ( Poor in conjunction to other indicators )

Real economy Of Pakistan 2020, 5 years lowest.
Real Gdp Of Pakistan 2020, 5 years lowest.
GDP of Pakistan 2019
GDP of Pakistan 2018
http://www.sbp.org.pk/ecodata/index2.asp

External Debt of Pakistan 2019

Debts are meant to return and if not played with correctly can lead to bankrupt.

Max Debt of Pakistan during the last decade = $ 99.108 Billion (2019) Poor

Min GDP of Pakistan during the last decade = $ 52.430 Billion (2014) Healthy

External Debt of Pakistan 2019
External Debt of Pakistan 2019

Debt to GDP ratio of Pakistan 2019

It is a measure of external debt vs Gross Domestic Production. The lower the value of this ratio is, the better is the progress of the government.

Min Debt to GDP ratio of Pakistan during the last decade = 60.1 (2011) Healthy

Max Debt to GDP ratio of Pakistan during the last decade = 72.5 (2018) Poor

Debt to GDP ratio of Pakistan in 2019 is expected to increase by previous 72.5. Poor

Debt to GDP ratio of Pakistan 2019.

Debt to GDP ratio of Pakistan 2019.

Inflation rate of Pakistan 2019

The increase in Cash Flow introduces Inflation. This means that respectively more amount of money is chasing the same available items.

Its not for the first-time in the history of Pakistan that inflation rate is reaching this much high peak. But, its worst as if we analyse and compare it with the last 5-years of the economy of Pakistan.

Inflation should be there for a sustained economic growth. But abrupt increases are harmful!
In all scenarios.

Money Supply of Pakistan (Cash Flow)

Money Supply of Pakistan (Cash Flow) 2019

Cash Flow vs Inflation and GDP 2019

What it tells the increase in an economy cash flow and inflation?

Increase in cash flow (availability of more cash) can increase demand, and if the demand of Imported items increases, than the economy get hurt.

Whereas, in the meanwhile increasing the duty on imported items discourages imports and encourage local-production.

But, if we take a look at local-productions. GDP is decreasing. It means in a nutshell the economy is in a great chaos.

Consumer Price Index (CPI) of Pakistan 2019

It is the rate of goods in the local market for any particular item. Its comparison can reveal the Inflation rates and overall burden on locals.

A high value reveals increased costliness of items in the market.

CPI index of Pakistan in 2018 = 220 Index Better

All time minimum in 2001 = 62.82 Index Healthy

Reaching an all time high in the history `2019 = 244.03 index Poor

Consumer Price Index (CPI) of Pakistan 2019
Consumer Price Index (CPI) of Pakistan 2019

Producer Price Index (PPI) of Pakistan 2019

These are the statistics generated by Bureau of Labor Statistics. These statistics determine the increments or decrements in expenses for production of goods. But they are from the maker or manufacturer point of views.

Producer Price Index (PPI) of Pakistan 2019= 259.57 Index Poor

Producer Price Index (PPI) of Pakistan 2018 = 220 Index Better

Producer Price Index (PPI) of Pakistan 2019
Producer Price Index (PPI) of Pakistan 2019

Stock Exchange Index of Pakistan 2019

The stock exchange of Pakistan is facing severe declines. The higher the index values are, the higher the economic condition is. Therefore the condition of an economy is largely dependent upon this factor and its performance can be measured with a little effort.

But the KSE 100 Index met a 12.7% recession from the very start of 2019.

The Maximum Stock Exchange Index of Pakistan 2017 = 52876.46

The current Stock Exchange Index of Pakistan 2019 = 33106

Stock Exchange Index of Pakistan 2019

Stock Exchange Index of Pakistan 2019

Uncertainty In The Pakistani Market 2019

According to Riebold [1969, p. 24], cash flow is the internal flow of the generation and use of money over a certain period of time. Accordingly, variations of cash flow affect the production decisions [Rivero, 1989].
If there is an increase in cash flow, then production will most likely increase, indirectly improving economic activity (for example, through employment rates and economic growth).

Riebold [1969, p. 24]

Economy Of Pakistan 2019

In a nutshell

The duty on imported items is increased, discouraging local consumption, in the meanwhile there is no local production.

The PPI has also increased which means economic growth glitch or discontinuation.

Whereas an option in the present situation can be : An increase in money supply or cash flow and decrease in the interest rates. This can generate a hope of increase in investment, typically.

Abrupt Inflation rates show the anxiety of the market and poor management

But abnormal rise in the interest rates too, discourages investment in reference to this particular indicator i-e High Cash Flow.

Furthermore no actions are under observation by government which add shame to the injury.

More than 50% of the Pakistani population is living below the poverty line, and there is no ray of hope for them.

The government has readily accepted all the conditions of the IMF (international monetary fund) stabbing the poor directly by leaving them helpless.

Fiscal Deficit

The Fiscal Deficit of Pakistan is increasing by each passing day and is expected to increase further. In this situation, the government should lose its grip over businessmen. So, they can work with a hope of betterment in the future, else I fear for them fleeing the country as in the past.

Economic Reforms

The worsening situation of the Pakistani economy has triggered an alarming situation for the investors and businessmen. In the previous era of dictatorship, Pakistan had to go-through severe financial losses. The previous government tried to recover those losses and somehow did. Bur its time to take steps in the right direction. The priorities of the government are to pass the time in one way or the other. Reforms in the Economic Development sector is the only hope of bringing the change.

Foreign Investment

Foreign Investments can bring changes in the economy. However, under this government there is a constant declination in the foreign investments. And government isn’t doing anything serious to increase the foreign investments.

World Bank

According to the World Bank In Pakistan, the country has a lot of potentials. The youth and the resources are all in abundance, but there is no effective policy in action to help them grow.

Tax Base

Pakistan has a broad tax base. The country has already implemented several direct and indirect taxes. The government can subsidize the poor by adopting a clear tax-base policy. The rich are evading taxes, whereas the poor are subjected to equal indirect taxes, all because of the dishonesty of the institutions.

My Take on The Economy of Pakistan

Why do I think that the economic policy of the previous government was compliant with the psychology of Pakistani businessman?

The point is that no one can understand the economy by just reading the books and knowing the formulas to find the inflation, interest rates, etc. and by presenting the data in different graphs and old aged interfaces.
Business is all about reading the psychology of a businessman, who is not as educated as his manager or accountant but is intelligent enough to make money and hire a chartered accountant.
It Is also not the same as described by the “professionals” on the T.V screens and business blogs. As a good business-expert is one who is expert in manipulation. So, manipulation of ideas, and information is the new-world’s economy.
Business is all about a volatile market, which keeps on changing by each passing second, where people avail every chance to manipulate the things, and try to evade the governmental policies or governmental legislative restrictions. They also don’t restrain their selves from making supportive legislation .
So we need to evaluate the things on a rational basis and real-time market calculations. We need to see the market as differently as we can. We also need to know the fact that the economy is not about the revealed knowledge but the hidden wisdom. It’s about those hidden sectors and secrets which are never shared by the businessmen except what benefits them.

Performance and Definitions:

What is GDP?

It is the value of total goods generated, and services provided in a fiscal year.
Performance in 2019 – Poor

What is Money Supply?

It is the total amount of circulating money. It includes M1, M2, and M3.
M1 includes all currency types (coins, paper notes) or anything that can be quickly converted to cash.
M2 includes M1 and short-term pay-back deposits. Like a car which may take 20 days in case you want to sale it and convert to cash.
M3 includes M2 and long-term pay-back or convert-to-cash assets.
Performance in 2019 – Poor

What is Producer Price (PPI)?

It is the actual expenditure on the production of any element and is also known as Wholesale product cost.
Example: total cost on the production of crude-oil or ice-cream.
Performance in 2019 – Poor

What is the Consumer Price Index (CPI)?

The change in the price of Basic-need-items is calculated under CPI. But it does not include income or other assets.
Example: It’s about the difference between Rice, Tea, Wheat, Pulses, etc. calculated after a span of time, let’s say 6 months or a year (fiscal year).
Performance in 2019 – Poor

What is Inflation rate?

It is the rate of devaluation of your currency.
Example: if 1 dollar was enough to buy 1 bottle of water a year ago. After a decrease in the worth of dollar. Now you need to spend two dollars to purchase the same bottle of water.
Performance in 2019 – Poor

What is Employment rate?

It is the number of people working out of the total number of people reaching the age to work.
Example: There are 60 people working out of total 100 people. Moreover the employment ratio will be (60/100)x100=60% employment to population ratio. Also, it is facing a constant decline.
Performance in 2019 – Poor

What is Housing Sector?

Housing and building schemes are an indicator of growth.
In Pakistan, building and Housing department is the greatest revenue generating sector. Furthermore the Housing sector is a source of attracting foreign remittance too. Therefore this factor sharply determines the economic growth of Pakistan.
Performance in 2019 – Poor

What is stock Index?

Stock Index is the measurement of a selected section of stock market. It can be described as the shares or total divisions of a businesses available for sale to investors. It reveals the future business of any company or a country in a broader perspective.
Performance in 2019 – Poor

What is Spending?

It is the actual consumer activity. Therefore it shows the activity of the people in purchasing goods or services.
Performance in 2019 – Poor

What is Confidence?

I wanted to escalate it to the first position. As it describes the future of an economy in a most precise manner. Therefore the more confident are the investors and consumers, the faster the economy flourishes.
Performance in 2019 – Poor

Consultancy Credits: Haq Nawaz (Chartered Accountant) 
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Economy of Pakistan Appears in Extreme Danger – 14 indicators

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