Economy on the mend<\/p>\n
The Dawn
\nAsia News Network
\nKarachi<\/p>\n
In its report "Pakistan Economic Update, July 2002-March
\n2003", the Asian Development Bank has projected an optimistic
\noutlook for Pakistan's economy in the medium term. The estimated
\ngrowth rate of over 4.5 percent for 2002-2003 is a significant
\nimprovement on the 3.6 percent of gross domestic product growth
\nachieved in 2001-2002 and more so compared to the previous year.<\/p>\n
Improvement in agriculture, industry, exports, and imports,
\nand a significant increase in investment, savings and foreign
\ncapital inflows have contributed to the current growth rate.<\/p>\n
The ADB report attributes this improvement -- in the face of
\nexternal shocks during fiscal 2002 following Sept. 11, tensions
\non the border with India, continuing drought, slow growth in the
\nworld economy and upheavals of the Iraq war -- to the sustained
\nstability of macroeconomic indicators, improvement in the
\nexternal account and the government's firmness in maintaining the
\nmomentum of the on-going economic reforms.<\/p>\n
According to the report, both demand and supply factors are
\nexpected to speed up domestic economic activity. Increased
\navailability of water should boost agriculture and hydropower
\ngeneration. The textile industry is also better placed for
\nincreased production after heavy investment in the past two
\nyears.<\/p>\n
Demand factors include larger remittances expected to reach
\nUS$3.5 billion during the current year and the consequent
\nincrease in construction activity, as well as aggressive
\nmarketing of consumer credit by financial institutions. Increased
\nactivity, particularly higher growth in manufacturing, together
\nwith a reduction in import tariffs and a strong local currency,
\nis likely to ensure growth in imports.<\/p>\n
Foreign domestic investment should pick up provided the
\npolitical situation becomes stable. The external debt stock is
\nexpected to be maintained at about $32 billion over the medium
\nterm, with further improvement in the debt-profile, as expensive,
\nshort-term debt is replaced by long-term concessional borrowings.
\nExternal debt servicing then fell to some 20 percent of foreign
\nexchange earnings by 2004.<\/p>\n
However the projected increase in the rate of unemployment to
\nmore than nine percent from around eight percent in 2000. Also,
\ninflation is likely to rise to five percent in 2004.<\/p>\n
Thus it is more than likely that more people would fall below
\nthe poverty line by the time the current three-year Poverty
\nReduction and Growth Facility (PRGF) program of the IMF amounting
\nto over a $100 comes to an end in 2004. Of course, there is
\nhardly anything one can do to keep the rate of inflation from
\ngalloping at a time when economic activity is gaining momentum.<\/p>\n
But the government could do a lot more to save the poorer
\nsections from absolute destitution without upsetting its reform
\nagenda. If it takes a good number of employment generating
\nphysical and social infrastructure projects, it will not only
\nexpand the absorption capacity of the economy but also speed up
\nreform. Meanwhile, it could also make plans to distribute the
\nresultant hardships of the reforms equitably. As of now the
\nrigors of reforms have mainly been borne by the poorer sections.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/economy-on-the-mend-1447893297",
"image": ""
},
"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
}