Pakistan's PPP GDP for 2010-11 at $555 Billion

[Riaz Haq]

Nominal per capita incomes in both India and Pakistan stand at just over $1200 a year, according to figures released in May and June of 2011 by the two governments. This translates to about $3100 per capita in terms of PPP (purchasing power parity). Using a more generous PPP correction factor of 2.9 for India as claimed by Economic Survey of India 2011 rather than the 2.5 estimated by IMF for both neighbors, the PPP GDP per capita for Indian and Pakistan work out to $3532 and $3135 respectively.

Nominal per capita income of Indians grew by 17.9 per cent to Rs 54,835, or $1218, in 2010-11 from Rs 46,492 in the year-ago period, according to the revised data released by the government in May, 2011 as reported by Indian media.

In June 2011, Economic Survey of Pakistan reported that the nominal per capita income of Pakistanis rose 16.9 percent to $1,254 in 2010-11, up from $1,073 in 2009-2010.



Neither of these figures are adjusted for inflation which has been running in high single digits in India (about 9%) and double digits in Pakistan (about 14%).

Economic Survey of Pakistan 2010-11 puts the nation's population at 177 million and nominal gdp at $222 billion. In terms of purchase power parity with the PPP correction factor of 2.5, it works out to $555 billion PPP GDP.

Looking at the increase in nominal GDP alone can be quite misleading in judging the health of any economy. Other indicators, such as real GDP growth and investments, show that the state of Pakistan's economy is very poor. The nation's GDP grew only 2.4% in real terms in 2010-2011. Domestic investment dropped to a 40-year low of 13.4% of GDP, and foreign direct investment (FDI) declined by 29 percent to $1.232 billion during July-April 2010-11 from $1.725 million in the same period a year earlier.

In addition to improved security environment, Pakistan has an urgent need for serious economic reform, greater social justice and better governance. Unless the PPP government acts to improve this situation, no amount of foreign aid, external loans and other help will suffice. The first step in the process is for the ruling elite to lead by example by paying their fair share of taxes and adopting less extravagant personal lifestyles to get Pakistan's fiscal house in order.

Related Links:

Haq's Musings

Economic Survey of Pakistan 2010-11

Pakistan's Per Capita Income Exceeds $3,100 in 2010-2011

Pakistan's Story After 64 Years of Independence

India and Pakistan Contrasted in 2010

Oligarchs of India and Pakistan

[Riaz Haq]

There are a lot of different figures and forecasts floating around different websites and publications that significantly overstate India's GDP and understate Pakistan's.

The figures I have provided here were released in May 2011 by India and in July 2011 by Pakistan. This is the only apples-to-apples comparison that is valid. The rest is irrelevant.

Economic Survey of Pakistan 2010-11 puts the nation's population at 177 million and nominal gdp at $222 billion or $1254 per person.

And Economic Survey of India 2010-2011 says India's population is 1.2 billion and puts nominal GDP at $1.46 trillion or $1218 per person.

http://articles.economictimes.indiatimes.com/2011-05-31/news/296044...

http://www.infopak.gov.pk/EconomicSurvey/Highlights.pdf

[Riaz Haq]

Here's an Express Tribune report on Pakistan economic growth in current fiscal year:

Pakistan’s economy grew by 3.2%, which is much below the official target and the required growth rate, leaving at least 1.3 million people jobless this year.

“According to a provisional assessment, gross domestic product (GDP) grew by 3.2% in the financial year 2011-12 ending June 30,” said Sohail Ahmad, Secretary of Statistics Division, after chairing the 91st meeting of the National Accounts Committee, convened to finalise the growth figure.

Estimates are based on provisional information for eight to nine months, which is used for projection for the entire year.

This growth figure remains below the target of 4.2% and even less than the conservative estimates of the International Monetary Fund and the Asian Development Bank that put the growth at 3.6%.

The committee’s data shows that the major push came from commodity producing sectors – agriculture and industry – as the government missed its services growth target with a wide margin.

Net national income increased by Rs282.5 billion and, with the year’s population growth rate at 2.05%, per capita income rose by 1.3%.

“The growth rate is not enough to absorb two million people entering the job market every year,” said Dr Ashfaque Hasan Khan, Dean Business School of NUST. For creating jobs for the new entrants, a 7% to 8% growth was required, but due to the low rate 1.2 to 1.3 million young people remained unemployed this year.

Average growth for the last five years – covering all the period of Pakistan Peoples Party-led coalition government which came to power in March 2008 – stood at just 2.58%. In 2008, the economy grew by 2.2%, in 2009 2.8%, in 2010 1.8% and in 2011 3%, said Arif Cheema, Director General of Pakistan Bureau of Statistics.

Agriculture sector (24.7% of GDP)

The agricultural sector that pushed the overall growth rate up saw a robust growth due to improvement in soil fertility after floods for two years. Against the target of 3.4%, the sector grew by 3.6%.

Targets for major crops and forestry growth were surpassed. Compared to the target of 3%, major crops grew by 6.1% while forestry growth was 4.1% against the target of 2%.

However, production of minor crops dropped 2% against the target of 2% growth. Targets for wheat, sugarcane and rice production were also missed. Against the target of 25 million tons, wheat output was 23.5 million tons.

Rice production stood at 6.2 million tons compared to the target of 6.6 million tons while sugarcane harvest remained at 56.3 million tons against the target of 57.6 million tons.

Industrial sector (22.2% of GDP)

The industrial sector, which rose by 1.9% last year, expanded 3.6% this year because of growth in electricity, gas and water supply sub-sectors. The industrial growth target was 3.2%. Electricity and gas sectors grew by 15.5% against the target of just 1%. “We have added subsidies to the output of electricity generation, which is according to international norms,” said Arif Cheema.

Growth rate for mining and quarrying stood at 1.7% against the target of 1% while the manufacturing sector grew by 2.4% against the target of 3.7%. In the manufacturing sector, large-scale manufacturing rose by just 1.64% while the construction sub-sector, which last year contracted by around 1%, saw a growth of 2.8% this year.

Services sector (53.1% of GDP)

The government missed the services sector growth
target of 5% by a wide margin, as the biggest component of the economy rose by just 2.2% due to contraction in banking and financial sectors.

The finance and insurance sectors contracted by 11%, said Arif Cheema. The growth targets of all sub-sectors, except for ownership and dwellings, were missed....

http://tribune.com.pk/story/370522/short-of-expectations-unemployme...

[Riaz Haq]

Here's a News report on Pakistan's 2011-12 GDP estimates: The size of Pakistan’s economy increased to Rs20.653 trillion and per capita income in dollar terms stood at $1,372 after the revision of GDP growth estimates from 3.2 percent to 3.7 percent for the outgoing fiscal year 2011-12.

“The per capita income on market price basis has increased by 9 percent in the outgoing fiscal year as it went up to $1,372 in 2011-12 compared to $1,258 in the last fiscal year 2010-11,” an official working paper available with The News disclosed. The per capita income will be officially unveiled in the Economic Survey 2011-12 which will be launched a day ahead of the upcoming federal budget 2012-13.

The economic managers, sources said, have used average exchange rate at Rs88.31 against a dollar for the first nine months (July-March) period of the outgoing fiscal year and estimated population at 178.9 million. If average exchange rate of first ten months (July-April) is used, which is at Rs88.7 to a dollar, then per capita income will fall to $1,354 for outgoing fiscal year. It is yet to see which average of exchange rate is taken by the government to estimate per capita income.

After revision of GDP growth estimates up to 3.7 percent by National Accounts Committee (NAC) by abandoning rebasing exercise and deciding to use the previous base year of 1999-2000, the size of the economy increased by Rs2 trillion and went up to Rs20 trillion from earlier estimates of falling around Rs18 trillion.

The rise in size of the economy has helped the government to restrict its budget deficit in the range of 6.7 percent to 7 percent of GDP for the outgoing fiscal year. The one percent of GDP, equivalent to Rs206 billion, means that the budget deficit in rupee terms will be standing at Rs1,442 billion in case of deficit of 7 percent of the GDP.

The Pakistan Statistical Bureau (PSB) had committed blunders in this rebasing exercise as authorities estimated that the financial sector that was shown falling by negative 11 percent in 2011-12 by using base year of 2005-06 but it actually achieved plus 6 percent growth in 2011-12 on the basis of previous base year 1999-2000.

The economic deflator grew by 9.5 percent in outgoing fiscal year from revised estimates of over 18 percent in last fiscal year 2010-11, indicating that it declined by almost 100 percent.

The reasons for this massive decline in deflator was attributed to highest ever increase in cotton prices in international market that surged up to 129 percent in last fiscal year 2010-11 resulting into jacking up deflator in a massive way.

The prices of cotton are not catered into CPI based inflation so it was reflected by end of the last fiscal year through deflator while in outgoing fiscal year the prices of cotton dropped significantly so the deflator in outgoing fiscal year also declined.

In the last Economic Survey 2010-11, it was stated that Pakistan’s per capita real income had risen by 0.7 percent in 2010-11 as against 2.9 percent last year. Per capita income in dollar terms rose from $1,073 last year to $1,254 in 2010-11, thereby showing an increase of 16.9 percent.

This is mainly because of stable exchange rate as well as higher growth in nominal GNP. Real private consumption rose by 7.0 percent as against 4.0 percent attained last year. However, gross fixed capital formation lost its strong growth momentum and real fixed investment growth contracted by 0.4 percent as against the contraction of 6.1 percent in last fiscal year.

http://www.thenews.com.pk/Todays-News-3-107322-Size-of-economy-rise...

[Riaz Haq]

Here's the latest per capita income data from Economic Surveys of India & Pakistan:

India's per capita income for 2011-12 Rs 60,972, according to Economic Survey of India 2011-12. It translates into US $1143.09, using INR 53.25 to a US dollar.

The preliminary official estimates are indicating that Pakistan's nominal per capita income has increased by 9% to $1,372 in 2011-12 from $1,258 in 2010-11.

http://indiabudget.nic.in/survey.asp

http://www.thenews.com.pk/Todays-News-3-107322-Size-of-economy-rise...

[Riaz Haq]

Pakistan's annual GDP rose to $252 billion (184.35 million pop times $1368 per capita) in fiscal 2012-13, according to Economic Survey of Pakistan 2012-13 estimates based on 9 months data.

http://www.finance.gov.pk/survey/chapters_13/executive%20summary.pdf