Pakistan Economy Nears Trillion Dollar PPP GDP Mark in 2015

Pakistan's PPP GDP is nearing trillion US$ mark in 2015, according to the latest figures available from the International Monetary Fund.

Nominal GDP based on current exchange rates is reported at $270 billion in 2015, up from $246 billion in 2014, an increase of $24 Billion.  Pakistan's per capita nominal GDP for 2015 is $1,427.085, up from $1,325.790 in 2014.

The nation's PPP GDP increased from $884 billion to $930 billion, an increase of $46 billion. Pakistan per capita PPP GDP is $4,902 for 2015, up from $4,749 in 2014, according to the IMF.

A dramatic decline in terrorist violence in Pakistan since the launch of Pakistan Army's Operation Zarb-e-Azb and a big drop in international oil prices have helped drive the country's economic recovery in recent months.

Among the clearest signs of recovery are increasing auto sales, growing smartphone purchases and cement consumption.

Pakistan auto industry is booming. Toyota, Suzuki and Honda factories are working around the clock in the southern port city of Karachi and eastern city of Lahore -- yet customers can still wait for up to four months for new vehicles to be delivered, according to media reports. At the same time, increased construction activity is visible everywhere in the country. First 5 months of the current fiscal year have seen sales of 93,570 cars, an increase of 66% over the same period last year.

Over 2 million 3G subscriptions and a corresponding number of smartphones are being bought every month in the country. More than half the people in Pakistan are expected to own a smartphone within the next few years.

Domestic cement sales have jumped by a phenomenal 16.89% to 4.29 million tons during July and August 2015 from 3.67 million tons shipped in the same period last year.

After its September meeting, the State Bank of Pakistan (SBP) said the rise in fixed investment financing in the energy generation and distribution, chemicals and services sectors signal possible increase in their productive activity in coming months. “The implementation of infrastructure development and energy projects under the China-Pakistan Economic Corridor (CPEC) will further enhance the improving investment environment. Therefore, there is anticipation of higher economic activity in 2015-16, which is expected to boost credit uptake,” it said.

Even as its economy recovers, it is unfortunate that Pakistan continues to lag behind its South Asian neighbors in human development.  The latest 2015 human development report from the United Nations Development Program (UNDP) shows that the country's leadership is continuing fail its people, particularly the youth, by its lack of focus and underinvestment in education and health care sectors. There can be no sustainable economic growth without investing in human development. It requires immediate attention.

Related Links:

Haq's Musings

Pakistan Auto Industry

Record Cement Sales Raise Hope Of Pakistan Economic Recovery

Credit Suisse Bullish on Pakistan Cement Industry

China-Pakistan Economic Corridor

Pakistan Army Acts Against Terrorists

Pakistan Middle Class Larger & Richer Than India's

Top Global Investor Bullish on Pakistan

The Role of Cement Industry in Economic Development of Pakistan


Riaz Haq said…
After encouraging response, #Haier #Mobile #Pakistan to grow aggressively with #smartphone manufacturing in Q1 2016 …

It has been barely seven months since Haier Pakistan further diversified its portfolio and entered the saturated cellphone market, but the overwhelming response has forced the company to pursue its expansion plans more aggressively.

Haier is the first company that is establishing a mobile phone assembly plant near Lahore with an investment of $5 million. The plant, which is likely to be completed by the end of the first quarter of 2016, will have the capacity to assemble 1.5 million cellphones annually.

“It takes years for a mobile company to diversify in such a competitive market, but we did it quite brilliantly. The coming year will be exciting for us as by March we will be launching the mobile assembly plant in Pakistan as per our commitment to bringing in technology and making our products more competitive,” said Zeshan Qureshi, Chief Executive Officer of Haier Mobiles, in an interview with The Express Tribune.

For Qureshi, the company’s product range has expanded to 27 in a short span, as it was only seven at the beginning. By March 2016, the company is hopeful that it will be able to further diversify the product range to around 35.

“The quality of our products is being appreciated in the market; this is due to our strong research and development wing that helped in selling over 0.5 million units in about seven months,” he added.

The price range is also flexible. Mobile sets are available at as low as $15 and go up to $300. The company has introduced three mobile categories for low, medium and high-end customers.

“We are about to launch a high-end product, V-6, which will be available at $450, the highest so far for our company,” Qureshi said.

He was of the view that any mobile brand should have a portfolio of 25 products in order to penetrate 100% in the market.

“At present, we have 80% penetration in Pakistan’s mobile market via our network of 18,000 distributors. There might be few areas remaining but we hope to reach those soon.”
The company has also introduced theft and accidental insurance for all its products through its 29 customer care centres.

Journey in Pakistan

Haier is operating in Pakistan’s market for 15 years and has established itself as a reliable name in household products. According to the company, every household has at least one appliance of Haier.

“The new era is of internet of things and every electronic appliance manufactured these days has these features. In order to connect these appliances with internet, we need a mobile or a tablet. And we have introduced mobiles to connect with the world,” he said.

Qureshi cited taxation and grey trafficking as areas that were affecting the brands. However, he said, it could be curbed if brands started investing in local markets as Haier was doing.

“We can only force the government to create an eco-system for mobile companies if they have strong presence and contribute reasonably to the economy, technology transfer and job creation.”
Riaz Haq said…
#Pakistan infrastructure: #CPEC project with #China could boost Pakistan economy- Nikkei Asian Review

The China-Pakistan Economic Corridor initiative, a planned $46 billion network of transport links, appears to be gaining momentum, which is good news for Pakistan's sluggish economy. Still, security and funding issues remain an obstacle.

The CPEC project, agreed to by Chinese Prime Minister Li Keqiang and his Pakistani counterpart, Nawaz Sharif, in May 2013, would connect the Arabian Sea port of Gwadar in southwestern Pakistan with the Xinjiang region of northwestern China upon its scheduled completion in three years.

The corridor is part of China's "One Belt, One Road" initiative to establish a network of transcontinental land and sea routes. China views Gwadar as a potential hub for trade with the Middle East, Africa and Europe. The project is also aimed at promoting development in Xinjiang and Tibet.

Gwadar, a deep-sea port that is widely expected to become Pakistan's biggest, started container ship operations in May.

Claude Rakisits, senior fellow at the South Asia Center of U.S. think tank the Atlantic Council, said the project could be good for Afghanistan, too. "If peace eventually does come to Afghanistan, CPEC will help that country integrate more closely economically with Pakistan and Iran," he said. "And, of course, it will provide direct access to western China and its hinterland ... a vast and fast-growing region in need of development."

Added Rakisits, "Needless to say, with better roads and railroads, the huge Pakistan market will be easier to access for foreign investors."
Riaz Haq said…
SBP Report for 2015 as seen by economist Kamal Monnoo:

First, Growth: As per the report the real GDP growth rate for the FY 2015 was 4.20% with 2.90% coming from agriculture, 3.60% from industry and 5.0% from services. Clearly this 4.2 falls short of 5.20%, the benchmarked target, but then from government’s perspective its defence could be that this is a better showing than in FY 2013 — when they took over — and that it has performed well to put the growth back on an upward trajectory. In FY 2013 we witnessed a fall in growth to 3.70% from 3.80%, but thereon it has been rising, 4.0% in FY 2014 and now 4.20% in FY 2015. A reasonable argument, but the problem is that when we dissect this growth performance, a rather troubling picture emerges. Pakistan, a country with high mix of existing employable youth and a population growth rate that requires more than 200,000 new jobs a year, essentially needs to grow in sectors that optimise job creation, meaning industry and agriculture.

However, these are the very sectors where we either saw stagnation or a decline: growth rates in industry fell to 3.60% from 4.50% (a staggering 3.20% off the target) and in agriculture a marginal movement of +0.20% (but 0.40% off the target). Even worse, the decline in industry came largely on the back of falling exports (not ‘stagnating’ exports as being claimed in the report) and that too in textiles – the most labour intensive industrial sector. Exports from developing economies, as we know, basically capitalise on cheap labour to gain competitive edge in international markets, in turn directly touching the lives of low-wage labourers and serving the twin purpose of mass employment generation cum distribution of income to low-income strata.

The simultaneous erosion of industry and exports depicts a dangerous trend, which if not quickly arrested can lead to serious social unrest. Add to this the dismal performance of agriculture in 2015 — the largest employment providing sector — and the picture becomes even gloomier. The mess-up in agriculture actually makes up for a perfect storybook tale of corruption, incompetence and neglect, qualifying for criminal investigation. A story of greed of seed and insecticide/pesticide mafia resulting in devastating outcomes where nearly one third of Punjab’s cotton crop stands wiped out and its quality badly bruised, once robust fields of sugarcane now reduced to low yield harvests, and the image of legendary Pakistani Basmati rice seriously dented.

Second, Financial Industry, Debt and Credit-to-GDP ratio: This dodgy saga of underlying growth does not end at the poor showing of industry and agriculture, but also goes on to manifest itself in the services sector, which presumably in 2015 has been the economy’s engine of growth. The services sector grew by 5%, up 0.60% from the previous year and with it taking the overall growth to a respectable level. But then again, scratch the surface and beneath it one finds the malaise of our banking and financial industry. Its growth mainly came on the back of governmental services, finance (debt) to the government, and insurance that also primarily catered to governmental borrowings. Nearly 1.90% out of the 4.20% GDP growth or 75% of the service-sector’s growth can be attributed merely to the government. And this policy of high state loans from commercial bank — in the process crowding-out the private sector — by itself is very counterproductive since in essence capital flows away from the efficient user (private sector) to the less efficient user (government). Moreover, it retards investment, employment generation, and creates an incremental debt in the economy, which otherwise could have been avoided.
Riaz Haq said…
July 2015-Jan 2016: #Pakistan domestic #Cement dispatches up 16% …

Cement dispatches in the first seven months (Jul 2015 to Jan 2016) of the current fiscal 2015-16 increased by 6.38% to 21.3 million tons compared to 20.022 million tons during the same period of last fiscal, according to latest data released by the All Pakistan Cement Manufacturers Association (APCMA).

This positive overall growth is attributed to the robust increase in domestic dispatches during this period. Local dispatches increased by 15.57% to 17.9 million tons from 15.5 million tons in the period under review.

On the contrary, exports declined to 3.4 million tons from July 2015 to January 2016 against 4.5 million tons from July 2014 to January 2015, down 24.98%.

Factories located in the north of the country dispatched 14.7 million tons in local markets from Jul 15 to Jan 16 against 12.9 million tons during the same period of last fiscal year, depicting a growth of 14.12%.

South-based factories registered a higher growth of 23% in domestic dispatches from July 15 to Jan 16 as their local sales recorded in this period were 3.12 million tons against 2.53 million tons during the same period last year.

In exports, north-based mills registered a decline of 22.3% as exports were restricted to 2.2 million tons in first seven months of this fiscal against 2.782 million tons during July 14 to Jan 15. South-based factories also suffered a drop in exports during the first seven months of current fiscal year by 29.2% to 1.243 million tons from 1.756 million tons in corresponding period of last fiscal year.

The industry dispatched 3.085 million tons of cement in the month of January 2016 compared with 2.898 million tons during January 2015, a growth of 6.47%.

Again this was mainly attributed to healthy domestic sales. Local dispatches during January 2016 were 2.69 million tons against 2.419 million tons during January 2015 showing growth of 11.54%.

Export dispatches during January 2016 dropped to 386,562 tons against 478,000 tons during January 2015 showing decline of 19.19%.

Economic planners are not giving due attention to the rapidly declining cement exports, according to APCMA press release.
Riaz Haq said…
Pakistan PPP GDP has increased 4.5X since 1990 in terms of current international dollar, according to the World Bank:

1990 GDP $212 billion

2016 GDP $952 billion (IMF puts it at $982 billion)

The Geary–Khamis dollar, more commonly known as the international dollar (Int'l. dollar or Intl. dollar, abbreviation: Int'l.$ or Intl.$), is a hypothetical unit of currency that has the same purchasing power parity that the U.S. dollar had in the United States at a given point in time. It is widely used in economics.
Riaz Haq said…
Excerpts of The Price Waters Cooper PWC's The World in 2050 Report

Pakistan 20th largest economy by 2030 ($1.87 trillion) & 16th by 2050 ($4.24 trillion) from 24th largest in 2016 ($988 billion)

By 2050, emerging economies such as Mexico and Indonesia are likely to be larger than the UK and France,
while Pakistan and Egypt could overtake Italy and Canada (on a PPP basis). In terms of growth, Vietnam, India
and Bangladesh could be the fastest growing economies over the period to 2050, averaging growth of around
5% a year. Figure 3 shows the projected average annual GDP growth rate over the next 34 years for all of the 32
countries we modelled. Total GDP growth is also broken down into how much is attributable to population
growth and how much to real GDP per capita growth.


2.1 Background to our World in 2050 reports
Our first ‘World in 2050’ report was published in March 2006, featuring projections for potential GDP growth
for 17 leading economies over the period to 2050. Our initial model covered:
 the 10 largest advanced economies: the G7 (US, Canada, UK, France, Germany, Italy and Japan),
Australia, Spain and South Korea; and
 the seven largest emerging economies, which we referred to collectively as the E7 (China, India, Brazil,
Indonesia, Mexico, Russia and Turkey).
We subsequently updated our projections in March 2008, January 2011, January 2013 and February 2015.
With each new edition up to 2015, more countries were added to our model, which now also covers:
 Argentina, Saudi Arabia and South Africa to complete coverage of the G20;
 the Netherlands, as a key European advanced economy;
 Poland and Malaysia, as two fast-growing medium-sized countries; and
 Bangladesh, Colombia, Egypt, Iran, Nigeria, Pakistan, the Philippines, Thailand, and Vietnam as
additional relatively large emerging markets.


The largest movers over the next 35 years are projected to be Nigeria, Vietnam and Pakistan. Nigeria, which
currently ranks in 22nd place, could move up to 14th though this is dependent on diversifying its economy and
addressing weaknesses in institutions and infrastructure, as discussed further in Box 2. Vietnam could move
from 32nd to 20th, and Pakistan could move from 24th to 16th. Other strong emerging market performers include
Bangladesh who moves from 31st to 23rd and the Philippines, which moves up 9 places to 19th by 2050.


As previously touched upon, strong population growth will be a key driver of overall GDP growth in many of
today’s emerging market and developing countries, boosting their potential workforce and domestic consumer
markets. Figure 13 shows that the growth in the working age populations of many emerging markets, including
Nigeria, Pakistan and India, will outstrip growth in the total population. In contrast, for many advanced
economies, such as Japan, Italy and Germany, their populations will actually shrink in size by 2050. This
contraction will predominately be driven by a fall in the working age population; across the G7 economies,
average growth in the working age population will be negative over the period 2016-2050 at -0.3% per annum.
Riaz Haq said…
IMF estimates Pakistan's per capita income at Intl$ 5,402.8 (2017, estimate), putting the country's PPP GDP at more than a trillion dollars.

It has risen from 0.56% of the global GDP in 1980 to 0.81% in 2017.

It's currently ranked as the 24th largest economy in the world. PwC forecasts it to rise to the 20th largest by 2030 and 16th largest by 2050, overtaking Italy, Canada and South Korea.

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