Pakistan Economy is the World's Third Fastest Growing Among Top 25 Economies

[Riaz Haq]

Pakistan is now the world's third fastest growing economy among the world's top 25 economies with PPP GDP of over one trillion US dollars, according to  the International Monetary Fund (IMF). IMF has recently raised the country's 2018 growth forecast to 5.6%.

Courtesy:  Ashraf Hameedi, Highforest Capital

Pakistan 3rd Fastest Among Top 25: 

Spectator Index has ranked India first with 7.3% growth, followed by China (6.5%), Pakistan (5.6%), Indonesia (5.3%) and Turkey (3.7%) among the world's 25 largest economies in terms of PPP GDP.

Earlier in October 2017, the International Monetary Fund (IMF) forecast Pakistan's economy to grow at 6.3% CAGR over 2017-2022.

World Bank: 

The World Bank sees Pakistan's GDP to grow 5.5% in current fiscal year 2017-18 ending in June 2018, a full percentage point faster than the 4.5% average GDP growth for Emerging and Developing Economies (EMDEs) that include Argentina, Brazil, China, India, Nigeria and Russia among others. However, Pakistan economic growth continues to lag growth forecast for regional economies of India and Bangladesh. The report also highlights the issue to growing trade deficit and current account gap that could lead to yet another balance of payments crisis for Pakistan requiring another IMF bailout.

Source: World Bank Group

Pakistan GDP Growth: 

Here's an excerpt of the January 2018 World Bank report titled "Global Economic Prospects" as it relates to Pakistan:

"In Pakistan, growth continued to accelerate in FY2016/17 (July-June) to 5.3 percent, somewhat below the government’s target of 5.7 percent as industrial sector growth was slower than expected. Activity was strong in construction and services, and there was a recovery in agricultural production with a return of normal monsoon rains. In the first half of FY2017/18, activity has continued to expand, driven by robust domestic demand supported by strong credit growth and investment projects related to the China-Pakistan Economic Corridor. Meanwhile, the current account deficit widened to 4.1 percent of GDP compared to 1.7 percent last year, amid weak exports and buoyant imports."

Growing External Account Imbalance: 

The report correctly points out the problem of growing current account deficit that could turn into a balance of payments crisis unless the trade deficits are brought under control. Recent trends in the last three months do offer some hope with December 2017 exports up 15% while imports increased 10%. Exports in November increased 12.3%.

Along with double digit increase in exports in the last two months, Pakistan received remittances amounting to $1.724 billion in December 2017, 8.72% higher compared with $1.585 billion the country received in the same month of the previous year, according to data released by the State Bank of Pakistan (SBP), as reported by Express Tribune.

Summary:

Pakistan is the third fastest growing economy among the top 25 economies in terms of purchasing power parity.  Pakistan's economic growth is continuing to accelerate amid rising rising investments led by China-Pakistan Economic Corridor related infrastructure and energy related projects.  The IMF sees Pakistan economy growing at 5.6% while the World Bank forecasts it to grow by 5.5% in current fiscal year 2017-18 ending in June 2018, a full percentage point faster than the 4.5% average GDP growth for Emerging and Developing Economies (EMDEs) that include Argentina, Brazil, China, India, Nigeria and Russia among others. However, Pakistan economic growth continues to lag growth forecast for regional economies of India and Bangladesh. The report also calls attention to the expanding current account gap as a matter of concern that must be taken seriously by the government to avoid yet another return to the International Monetary Fund (IMF).

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[Riaz Haq]

Car sales up 20.4pc in six months

https://www.thenews.com.pk/print/266890-car-sales-up-20-4pc-in-six-...

KARACHI: Sales of passenger cars rose 20.4 to 103,432 units in the first half of the current fiscal year of 2017/18, official data showed on Wednesday.

Car sales stood at 85,901 in the same period of last fiscal year, according to Pakistan Automotive Manufacturers Association (PAMA).

In December 2017, sale of cars fell to 16,159 units as against 17,233 units in the previous month and 14,024 units in the same month a year ago.

Topline Securities, in a report, said the decline was due to the year-end’s leaner period of auto sales.

A total of 47,087 cars of 1,300cc or above category were sold during the first half, up 5.92 percent over the same period a year earlier.

But, the sale in the category declined to 6,652 units in December 2017 as against 8,087 in November and 6,880 units in December 2016.

Arslan Hanif, an analyst at Arif Habib Limited attributed the decline to crackdown of Indus Motor Company and cancellation of pre-booked orders of cars due to excess premium charged by dealers.

Under the category of 1,000cc category, a total of 23,642 units of Suzuki Cultus and Suzuki WagonR were sold, up 61 percent against 14,669 units sold last year.

One analyst said there is a huge increase in 1,000cc cars, as both WagonR and new variant of Cultus saw an amazing success in the country during the period under review.

Dispatch of 1,000cc category cars exhibited an uptick due to a massive demand from Careem, Uber and other transportation businesses.

Sales of 800cc and below 1,000cc cars, Suzuki Mehran and Bolan, increased 22 percent to 32,703 units in July-December from 26,780 units in the corresponding period last year.

“We believe Pak Suzuki continued to be major beneficiary as majority of used-car imports fall under lower engine capacity segment,” Topline Securities added.

A total of 4,562 buses and trucks were sold in the six-month period, up 17.5 percent.

Sales of farm tractors grew 54.3 percent to 32,310 units during the period under review.

A total of 6,797 jeeps were sold during the July-December period, depicting manifold growth as compared to 205 units sold during the same period last year.

The hefty sales were visibly due to an introduction of Honda’s BR-V. Honda recorded sales of 5,159 units of its new edition during the first half.

Sale of pick-ups was recorded at 13,909 units during the six months as against 11,427 units sold in the corresponding period last year.

Pakistan Automotive Manufacturers Association data further showed that a total of 940,825 motorcycles and three-wheelers were sold during the period under review, up a 19 percent over the same period a year ago.

[Riaz Haq]

7,500 new #motorcycles hit roads daily in #Pakistan. Production reached 2.3 million motorcycles in 10 months. Up 22.34% in 4 months

https://dailytimes.com.pk/179824/7500-new-motorcycles-hit-roads-dai...

KARACHI: Motorcycles production in Pakistan is reaching to its highest level with 2.3 million quantity of produced during the ten months of 2017 while average 7,408 new motorcycles hit roads daily in the country.
The production of motorcycles increased by 22.34 percent during the first four months of fiscal year 2017-18 (FY18), as compared to the corresponding period of last year, latest data of Pakistan Bureau of Statistics (PBS) revealed.

PBS’s latest data reveals that the motorcycle production including locally assembled Japanese brand and Chinese made imported motorcycles’ brand stood at 2251917 units in the first ten months (January-October) of 2017. It is to be noted that at least 2.5 million motorcycles were manufactured during past year while the number of motorcycles’ production in Pakistan has already crossed the 2 million mark in just ten months of this year.
It has been observed that in the absence of any public transport system in Pakistan, lower middle-income class of the country has been compelled to compromise their safety by choosing the two-wheelers as their conveyance.

Muhammad Zahid Iqbal Malik of Pakistan Bikers Club (PBC) said motorcycle assemblers in Pakistan produce low quality products just to maintain price stability. He said steady prices besides easy installment plans are the main reasons behind rapid growth of two wheelers in Pakistan.

He said rapid motorcycle production in Pakistan apparently portrays brighter picture but it is a harsh reality that among 2 millions motorcycles produced in 2017 we didn’t manufacture even a single bike here with 100% Pakistani parts.

“It is true that motorcycle industry is booming and providing opportunities for locals and supporting the economy. But Pakistan is still far behind from its neighbouring country as Indian company Hero started manufacturing with Honda Japan and now it has become a separate entity bigger than Honda”, he added.
Association of Pakistan Motorcycle Assemblers (APMA) Chairman Mohammad Sabir Shaikh said globally, there is an average life of a motorcycle, but in Pakistan with the nonexistence of any such law, the tax departments are allowed to collect lifetime tax at the time of registration of a new bike.
He further added that the situation is really alarming as the authorities don’t follow any standards for motorcycles’ registration which is making the motorcycle as the leading cause of fatalities.

He was off the view that the government should set the effective life limit of a motor cycle for tax reasons since the tax offices use 100 years as their average life at present. He suggests that the tax authorities should register a motorbike only for five years and after that period the registration of the motorbikes should be subjected to fitness tests.

[Riaz Haq]

Pakistan sales drive continues in second half of 2017
Written by Global Cement staff 
08 January 2018

http://www.globalcement.com/news/item/6938-pakistan-sales-drive-con...

Pakistan: Cement sales rose by 12% year-on-year to 22.2Mt in the last six months of 2017 from 19.8Mt in the same period in 2016. Data from the All Pakistan Cement Manufacturers' Association (APCMA) shows that domestic consumption rose by 17.4 % to 19.8Mt from 16.9Mt, according to the Express Tribune newspaper. However, exports continued to decline in the period by 17.3% to 2.9Mt from 2.4Mt. Exports fell in most parts of the country, particularly in the south, despite increases from plants in Punjab and Khyber-Pakhtunkhwa. The APCMA has blamed this on high industry costs, foreign imports and local legislation. 

[Riaz Haq]

"In the last two years, #India’s consumer confidence has plummeted, construction has slowed, the fixed #investment rate has fallen, many factories have shut down and #unemployment has gone up" #Modi #economy

https://www.todayonline.com/world/rising-anxiety-india-piercing-mod...

SURAT, India — The immense popularity of Narendra Modi, India’s most dynamic prime minister in decades, has always rested on two legs: Hindu nationalism and his tantalizing promises to build on the country’s go-go economy.

That second leg is now looking a little shaky.

In the last two years, India’s consumer confidence has plummeted, construction has slowed, the fixed investment rate has fallen, many factories have shut down and unemployment has gone up.

Fingers are pointing at Mr Modi. Just about all economists agree that two of the prime minister’s biggest policy gambles - abruptly voiding most of the nation’s currency and then, less than a year later, imposing a sweeping new sales tax - have slowed India’s meteoric growth.

“Things have been worsening, worsening, worsening,” said Himanshu, an economics professor at Jawaharlal Nehru University in New Delhi, who uses only one name.

Still, the economy here is far from failing. The stock market continues to soar, major rail, road and port projects are unfolding across the country, and foreign investors poured US$25.4 billion (S$33.8 billion) into India from April to September, up 17 per cent from the period in 2016.

The government on Friday predicted that the country’s gross domestic product would grow by 6.5 per cent in the 2017-18 financial year. While that is the lowest number the country has seen in four years, India’s economy is one that most countries would love to have.

But it does not feel that way to the huge number of Indians negatively affected by Mr Modi’s policies, and the grumbles are growing.

So are social tensions, especially those that divide Hindus from Muslims, and upper caste from lower caste.

The fear is that Mr Modi is already beginning to lean more heavily on that first leg of his, Hindu nationalism, now that his economic strategy is losing some of its sheen.

With 1.3 billion people, India is the world’s most populous democracy. In 10 years, economic forecasters predict that India’s economy will climb to third-largest in the world, behind only the United States and China. What happens here matters, and domestically, confidence is strained.

Even in Gujarat, the state considered the strongest of Mr Modi’s strongholds, where people have been cheering his rise for the past 20 years and line up in dusty fields by the thousands just to catch a glimpse of his saffron scarf and groomed white beard, many feel betrayed.

The output from the textile industry, a huge employer here in Surat, a Gujarati metropolis with hundreds of years of storied mercantile history and once a healthy exporter, has been cut nearly in half, prompting layoffs and despair.

In many of the industrial areas, the happiest merchants are the merchants of scrap, who make their rounds in lurching trucks, scooping up looms, steel spools and other underused machinery for pennies on the dollar.

In December, in an election that the entire country was watching because it was seen as a referendum on Mr Modi’s governance, Gujarati voters elected a new state Assembly. Mr Modi’s party maintained its majority but lost 16 seats.

The message was clear: Mr Modi’s party was still No. 1, but the man himself was no longer bulletproof.

“Modi hurt our business, and we want to show him that we can hurt him, too,” said Manish Patel, whose once clackety cloth factory is now completely empty, another Gujarati business that has gone under.

Mr Patel complained that under Mr Modi, “It was like we were in first class and now we’ve been put in 10th class.”

[Riaz Haq]

#Pakistan keeps #terrorists on the run and #economy on a roll
Businesses' focus shifts from bombs and kidnappings to taxes and policy. #Taliban #TTP #terrorism #India #Karachi #Rangers

https://asia.nikkei.com/Politics-Economy/Economy/Pakistan-keeps-ter...

KARACHI -- Terrorism, corruption, misrule: Negative perceptions have dogged Pakistan for years. But thanks to sweeping operations by the army and a powerful paramilitary force, those perceptions may be becoming outdated, and businesses are taking notice.

In Karachi, the country's largest city, motorcycles and elaborately decorated buses weave down dusty roads between colonial-era buildings. Less than a decade ago, these were truly mean streets. "Between 2010 and 2012, we saw one or two terrorist attacks every month and one or two targeted killings and kidnappings for ransom every day," recalled Army Maj. Gen. Mohammad Saeed. "There were 17 no-go areas which the police could not touch in Karachi."

At the time, even major hotels had occupancy rates of just 10% to 15%. Hundreds of shops and other businesses closed down.

Then the Rangers began to clean up.

The Pakistan Rangers, a paramilitary law enforcement organization overseen by the military and the Interior Ministry, set out to tackle the violence head-on. In 2013, the Rangers Sindh -- which operate in Sindh Province, including Karachi -- mobilized 15,000 troops. The provincial legislature granted them broad powers to search homes and make arrests, enabling them to quickly turn the tide.

These guns were seized at a hideout in Miranshah -- the front line of Pakistan's anti-terrorism operations. (Photo by Go Yamada)

In 2017, there were zero bombings and only five kidnappings, according to Saeed, who serves as director general of the Rangers Sindh. This is no small feat in a city with a swelling population of 17 million -- perhaps even 20 million if migrants from rural areas are factored in. "We destroyed all of the terrorists' pockets," he said, adding that hotel occupancy rates are over 90%.

The story is similar in Pakistan's other major cities. And as the Rangers have made headway, business sentiment has improved and growth has picked up.

Mohammad Saeed, director general of the Pakistan Rangers Sindh

Pakistan's real gross domestic product grew 5.3% in the fiscal year through June 2017, the quickest pace in 10 years. The central bank projects the growth rate for this fiscal year will approach 6%. Inflation has stabilized and exports are brisk.

"Unfortunately, Pakistan is a victim of negative perception," said Arif Habib, who heads the conglomerate Arif Habib Group. "There is a lot of difference between perception and reality."

But the rest of the world seems to be catching on to the positive changes, too: Foreign direct investment is estimated to reach a record $5 billion or so in the current fiscal year, up from $3.43 billion last year.

This is not to say Pakistan's safety problems are a thing of the past. The budget for maintaining security is insufficient, and efforts to shore up the police are still a work in progress. Another major challenge is to prevent militants who have fled to neighboring Afghanistan from coming back.

Treacherous borderlands

Miranshah is a one-hour military flight away from Peshawar, in Pakistan's northwest. It is the main city in North Waziristan, one of the semi-autonomous Federally Administered Tribal Areas.

This is the front line of Pakistan's anti-terrorism operations. The Afghan border is just 20km away

Around 2008, insurgents from al-Qaida and Tehrik-e-Taliban Pakistan controlled some 30% of North Waziristan. But large numbers of militants have fled or been killed since the army began weeding them out in 2014.

More than 300 people died in terrorist attacks in the FATA in 2014, but the number was down to 113 in 2017.

"During the operation, 26,000 rifles, 13,000 submachine guns and explosives for more than 50,000 suicide bombs [were seized]," said Col. Wasi Uddin in a bunker at the heavily guarded headquarters of the army's 7th Infantry Division. Monitors on the wall showed real-time footage of the border with Afghanistan.

Now that the heavy fighting appears to be over, people are returning and efforts to rebuild houses and public facilities are in full swing. The army is spearheading a drive to reopen hospitals, schools and bazaars in the FATA. Residents have been given 130 sq. km of farmland as well as job training programs.

"Now we are building a 1,400km-long fence along the border to stop the cross-border terror," the colonel said. But sporadic attacks are still a threat in the mountainous border region. A young military officer and another person were killed in an ambush on the outskirts of Miranshah in mid-December.

Pakistan's national security adviser, retired Gen. Nasser Khan Janjua, blames the neighbor. There is "no border control in Afghanistan," said Janjua, who has sparred with the U.S. over security measures. "In 2016, out of 128 terrorist attacks in Pakistan, 125 were cross-border terror from Afghanistan."

There are 145 monitoring posts on the Afghan side of the border -- around one-eighth the number on the Pakistani side -- reflecting the capacity constraints of the Afghan military and police.

Police accountability

Over in Peshawar, at the base of the Khyber Pass on the Pakistani-Afghan border, a determined effort to bolster the police is bearing fruit.

The city is a key hub for trucks carrying goods to and from Afghanistan. Freshly slaughtered lamb, mutton and live peafowl can be found at the local bazaars. Men tend to carry rifles -- a symbol of masculinity -- but violence has decreased significantly, according to the police chief for Khyber-Pakhtunkhwa Province.

"From 2007 to 2017, [the number of] dead and wounded in the province decreased to one-sixth," said Inspector General Salahuddin Khan. The police head count has surged to 82,000, from 34,000 in 2001, and the force receives training from the army.

A Karachi bazaar bustles with shoppers in December. (Photo by Go Yamada)

Khan and other police leaders are focusing on "depoliticization, digitization and confidence." They reject politicians' interference with recruiting, and have created a database of rented houses and vehicles terrorists might use.

"For security, cooperation from the local people is essential," Khan said. This includes holding the police themselves accountable: The government has established a Dispute Resolution Council, which includes third-party members appointed by a high court, to receive complaints against law enforcement.

Khan is not satisfied. "Support from the government is better than it used to be," he said. "But the budget is never enough. We are [making requests] all the time."

In Karachi, there is still a sense of unease despite the obvious improvement. Some government officials and foreign businesspeople still ride around in bulletproof vehicles with their own security details.

For now, the Rangers are keeping the pressure on. If police capabilities improve, Saeed said, "we will pull back."

[Riaz Haq]

‘#Pakistan #economy set to achieve 6% #GDP growth’ in current fiscal year 2017-18, says nation's central bank report

http://www.gulf-times.com/story/578803/Pakistan-economy-set-to-achi...


he State Bank of Pakistan (SBP) said yesterday that prospects for economic growth remain strong, noting that the economy is poised to achieve the growth target of 6% for 2017-18.
In its first quarterly report on the state of the economy, the SBP said rising income levels of consumers are fuelling retail sales and commercial activities.
However, there was an urgent need for finding more avenues for foreign exchange earnings and realigning policies favouring exports growth by addressing long-term structural impediments.
“For the external sector, recent gains in exports growth and foreign direct investments (FDI) while significant were not enough to contain the overall balance-of-payments deficit,” said the report.
It added that the widening of the current account deficit associated with increased economic activity is a recurrent phenomenon in Pakistan and has undermined maturing growth cycles in the past.
While the report expressed satisfaction over the increased revenue in the first quarter of 2017-18, it said that earlier efforts aimed at increasing the tax base need to be more concerted and perhaps require new, innovative methods.
The report raised the question whether the economy is doing well enough to sustain the virtuous equilibrium of high growth-low inflation into the medium and long terms. The report stressed the need for addressing the long-standing structural reforms in the fiscal and the external sectors for sustainability.
The report analysed the recent growth in exports and identified three reasons for it. Uninterrupted energy supplies to the manufacturing sector, increasing global demand and commodity prices and the recent exchange rate deprecation.
What stands out is the role of a benign inflationary environment for some time now that has helped spur the expansion in economic activities. Low and stable prices have facilitated and eased the process of economic decision-making.
“More tangibly, falling inflation along with healthy agriculture output and stable exchange rate has resulted in higher real rural incomes and urban wages. The resultant boost in consumption forms an integral part of the current economic growth paradigm,” said the report.
Low inflation has also allowed the SBP to cumulatively cut the policy rate by 425 basis points since the autumn of 2014.
The report suggested that average inflation in 2017-18 would remain below its annual target of 6%.
However, there are two major risks to this inflation forecast: first, recent exchange rate depreciation through expectations channel and, after some lag, through the higher imported goods’ price can seep into domestic prices; second, uncertain global oil prices pose both upside and downside risks.
The report said in the first quarter, the fiscal deficit was 1.2% of gross domestic product, lower than 1.4% recorded in the corresponding period of the last year. Total revenue recovered strongly, showing an 18.9% increase in the three-month period against an 8% decline in the same period a year ago.
“Against this, consolidated federal and provincial expenditures grew 12.8% compared to 2.8% increase in the same period last year,” said the report.


A worker inspects fabric on looms at a textile manufacturing unit in Karachi. The State Bank of Pakistan said yesterday that prospects for economic growth remain strong in Pakistan, noting that the economy is poised to achieve the growth target of 6% for 2017-18.

[Riaz Haq]

5 airlines to venture into Pakistan
Source: Xinhua| 2018-01-29 20:13:38|Editor: Lifang

http://www.xinhuanet.com/english/2018-01/29/c_136934060.htm

ISLAMABAD, Jan. 29 (Xinhua) -- Five national and international airlines have applied for regular public transport airline license of Pakistan Civil Aviation Authority (CAA) to venture into the country's aviation industry, local reports said Monday.

The airlines are expected to get permission to carry out the flight operation in the country's skies during the next one year, which is likely to bring down passenger fares, local newspaper Express Tribune said.

Airlines including Askari Air, Air Siyal, Go Green, Liberty Air and Afeef Zara Airways have applied for the license to be a part of the aviation industry which is expected to be around 9 percent per annum and likely to keep the same pace till 2020, according to a forecast of the International Air Transport Association, a trade body of world's airlines.

Pakistan's air traffic has soared up to 40 percent over the past five years to 20 million passengers, and is continuously witnessing an upward trend due to improvement of law and order situation in the country, which is bringing in more tourists in the country.

The China-Pakistan Economic Corridor (CPEC) has also resulted in the increase of air traffic in the country.

Most of the upcoming carriers will target low-profit, far-off destinations including Gwadar, Turbat, Panjgur, Khuzdar, Dalbandin, Zhob, in Balochistan province where CPEC projects are in full swing, and the tourist destinations of Rawalakot, Skardu, Chitral, Gilgit, Bannu and Parachinar.

The destinations could generate immediate profits because of their tourism potential and work on CPEC projects.

For these remote regions, the new carriers will bring airplanes suitable for small airports.

The entry of new airlines in the country's airspace is expected to further increase challenges of the country's national flag carrier Pakistan International Airlines, which was the sole operator in most of these routes in the past.

[Riaz Haq]

#Pakistan #automobile sales up by 21% in July-June 2017-18. Total car sales have gone up by 21 per cent in the last fiscal year with 216,786 units sold as compared to 185,781 units in the last fiscal year. #Manufacturing #economy https://profit.pakistantoday.com.pk/2018/07/11/cars-sell-up-21-per-... via @profitpk

In June 2018, auto sales were up 20 per cent YoY to 15,662 units whereas it was down 15 per cent month-on-month (MoM) due to the Eid holidays during June.

In a comment to Pakistan Today, Pak Kuwait Investment Company AVP Research, Adnan Sheikh said that “Auto sales have been increasing mainly due to a low-interest rate environment and the advent of ride-sharing apps, along with the introduction of new models like Civic BRV, Fortuner and The Wagon-R which have all performed well. But major growth in numbers comes from below 1000cc cars, mainly the Wagon-R for the price-conscious buyer and ride sharing captains. Mehran and Wagon-R together added around 20,000 additional unit sales. So you can see most buyers are in the price conscious category, whereas Honda’s sales grew because of two new models – new Honda Civic and BRV. While Toyota shifted production from the Corolla to the high-profit margin Fortuner and Hilux, volumes for the Fortuner more than tripled. Going forward, we may witness a slowdown in growth / potential dip in sales if car prices keep rising due to a rupee depreciation and higher international commodity prices, along with a sharp rise in interest rates and a spike in fuel prices; and the market will become extremely competitive when new players start producing with cost advantages under ADP incentives over the next two years”.

For the Fiscal Year ended 2018, Pakistan auto sales (including LCVs Vans and Jeeps) rose by 21 per cent year-on-year (YoY) with growth seen in all segments. “The strong performance was due to a multitude of reasons ranging from supportive macroeconomic environment, cheaper financing, demand from ride-hailing services, as well as demand generated from election activity,’ said an analyst at Topline securities. This slowdown in car sales is due to higher car prices as the company raised car prices for the third time during this fiscal year, continuous Pak-rupee depreciation against the dollar, he added. The major reason of declining car sales is the restriction imposed by the government on non-filers for booking and registration of new cars, and resumption of import of used and new cars through personal transfer or baggage scheme, the analyst said.