Survey of pakistan's economy dated feb 14 ,2010

Pakistan is passing through a period of biggest crisis of history. Either the crisis is of leadership or economy. Economy of Pakistan at macro level is not well and it is responsibility of government to take step to overcome that crisis, but it is negligence or incompetency of government that is affecting economy of Pakistan in negatively.

GDP (gross domestic product) of Pakistan is dropping rapidly because of the War against terrorism, which could be said "war of Americans", this is affecting industries and agriculture of Pakistan. Industries of marble and timber is affected badly by that war. That war is also made a problem of unemployment. Shah humayun Saeed chairperson of standing committee for foreign investment and trade delegation said "investors and local capital is transferring to gulf countries in large quantity"(1), this is due to lack of confidence on political situation of Pakistan and the extending war zone in Pakistan. The graph below shows the foreign investment in Pakistan.

GDP is badly affected by the duty imposed on our products in European markets. On one hand we are said to be the most important alloy of western countries but we have no importance in trade and finance sector(2). Industries in Pakistan are not able to deliver their orders in time due to shortage of electrical power. And somehow if they are able to complete it by procuring generators the product cost so high that no body is interested in buying that product. In northern Pakistan natural gas is also a trouble which is destroying industries. Cotton industry, chemical industry, leather industry and fans industry are most affected industries which are about to end.

Inflation is increasing day by day. Sugar, wheat and oil are so expensive that half of salary of ordinary men is spent on these items. This is due to mismanagement and corruption of government. Sugar and wheat are being smuggled to Afghanistan and Iran. This is causing food crisis which is resulting into increase in inflation and decrease in a life style of ordinary men.

The electricity prices are high due to increase in oil and gas prices. This is another reason for inflation. Government is silent on this issue and taking no steps towards increasing power. The supply of power is about 15MVA and requirement is about 22MVA which is a reason of increase in prices(3).

The above table is a interpretation of the graph shown above this graph is by the coutesy of economic survey of Pakistan.

Stock market after crashing at the end of 2008 is still not able to recover from that shock and still there is no subsidy by the government in the stock market on other hand previous government of Shoukat Aziz was giving subsidy to the stock market on the regular basis(4). The graph below shows that how massive decline was at the end of 2008 and now stock market is healing itself but this process is slow and hopefully long lasting.

SUGGESTIONS:

To control inflation government should end smuggling of food items to other countries and lower the taxes on new industries.

Agriculture reforms should be introduced and feudalism should bring to end.

For power crisis government should transfer its power stations from gas and oil to coal because we have enough coal for 100 years and it would be difficult to use this coal after some year because of global warming issues.

New hydal plans should be implemented and kalabagh dam should be build.



Refrences:

1. daily "Jung" Karachi date 11 February 2010

2. daily "Jung" Karachi

3. daily "Jung" Karachi

4. from independent source a market analyst.