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Relax, Pak has other problems too
Pakistan’s economy is almost on emergency mode; nobody’s worried!
Agriculture is the foundation of Pakistan’s economy. Almost 50% of their population is dependent on the agriculture sector. While this year (07-08) the agricultural growth was targeted at 4.8%, the country unfortunately achieved merely 1.5%. The agriculture sector growth has fluctuated in the range of 1.5% to 6.5% during the last six years. And Pakistan’s economy is also suffering due to internal political disputes, a fast growing population and mixed level of foreign investment and costly imports of food, fuel and fertiliser. National savings were placed at 13.9% of GDP in 2007-2008, going down from last year’s high of 17.8%. Domestic savings have gone down to 11.7% of GDP from 16.16% of GDP in 2006-2007. Overall, foreign investment during the first ten months of the current fiscal year has declined by 32.2% and is now placed at $3.6 billion as against $5.3 billion compared to the same period last year. Pakistan’s current deficit extended to $11.6 billion during this year (again, first ten months of 07-08), which is over 7.8% of GDP, against $6.6 billion last year.
During Jan-Oct FY08, imports of food stood near to $3.5 billion, fertiliser $823 million and fuel, a gigantic $8.6 billion. With the global oil and food price rise, and growing political instability, Pakistan might just be on the road to an economic disaster. And the warning signs are already on alarm mode. There has been a drastic reduction in fertiliser production as well as wheat produce. Add to this the over 17% oil budget rise, which happened solely because of the global oil price increase. An economic collapse is not a rare phenomenon if one sees developing nations, the most recent being Zimbabwe. Pakistan seems to be mirroring almost all the issues that plagued Zimbabwe. Sadly, all that remains now is for the fire alarm to blow!
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