Despite all terrorism/politics/protests/sit-ins/corruption/hindrances from politically motivated oppositions, hindrances from establishment division Pakistan heading towards economic stability and all credit goes to The Prime Minister of Pakistan Mian Mohammad Nawaz Sharif. Recently Pakistan becomes the fastest growing Muslim economy, Moody’s, Fitch & Standard and Poor’s (S&P) ratings agency has raised Pakistan’s credit rating to positive from stable.
Some Important Economic Indicators:
- Pakistan Stock Market
- Pakistan GDP
- Pakistan GDP growth rate/Annual growth rate
- Pakistan GDP per capita
- Pakistan GDP per capita (PPP)
- Pakistan Inflation Rate
- Pakistan Food Inflation
- Pakistan Interest Rate
- Pakistan Exports
- Pakistan Remittances
- Pakistan Foreign Exchange Reserves
instead of just talking let’s compare some of the figures from past with todays and decide.
- Pakistan Stock Market (KSE100):
Stock Exchange have multiple roles in the economy, such as:
- Raising capital for businesses;
- Facilitating company growth;
- Redistribution of wealth;
- Corporate governance;
- Investment opportunities for small investors;
- Government capital raising for development projects;
- Tax – KSE is one of the largest tax payer. Listed companies in KSE contributes over 10% of total revenue collected to the government of Pakistan.
A stock index is a measurement of the value of a section of the stock market.[KSE-100 Index] is major stock market index which tracks the performance of largest companies/groups by market capitalization from each sector of Pakistan economy listed on Karachi Stock Exchange.
Stock Market in Pakistan averaged 7931.23 Index points from 1990 until 2015, reaching an all-time high of 36228.88 Index points in August of 2015 and a record low of 538.89 Index points in June of 1990.
- Pakistan Gross Domestic Product (GDP):
Gross Domestic Product (GDP) is the most important of all economic indicators as it attempts to capture the state of the economy in one number. Quite simply, if the GDP measure is up, the economy is growing. If it is negative it is contracting.
GDP has a large impact on nearly everyone within that economy. For example, when the economy is healthy, you will typically see low unemployment and wage increases as businesses demand labor to meet the growing economy. A significant change in GDP, whether up or down, usually has a significant effect on the stock market. It’s not hard to understand why: a bad economy usually means lower profits for companies, which in turn means lower stock prices. Investors really worry about negative GDP growth, which is one of the factors economists use to determine whether an economy is in a recession.
The GDP in Pakistan was worth 246.88 billion US dollars in 2014. GDP in Pakistan averaged 59.62 USD Billion from 1960 until 2014, reaching an all-time high of 246.88 USD Billion in 2014 and a record low of 3.71 USD Billion in 1960. GDP in Pakistan is reported by the World Bank Group.
- Pakistan GDP growth rate/Annual growth rate:
Real Economic Growth Rate is the rate at which a nation’s Gross Domestic product (GDP) changes/grows from one year to another. GDP is the market value of all the goods and services produced in a country in a particular time period.
Real Economic Growth Rate takes into account the effects of inflation. Since inflation plays a key role in the GDP of an economy, it is very important to ascertain the effects of inflation on GDP. As a result, the Real Economic Growth Rate takes into account the buying power and is inflation-adjusted. This is the reason it is considered to be a better measure of growth rate than the nominal growth rate.
The Gross Domestic Product (GDP) in Pakistan expanded 4.14 percent in 2014 from the previous year. GDP Growth Rate in Pakistan averaged 4.92 percent from 1952 until 2014, reaching an all-time high of 10.22 percent in 1954 and a record low of -1.80 percent in 1952. GDP Growth Rate in Pakistan is reported by the Pakistan Bureau of Statistics.
- Pakistan GDP per capita:
GDP per capita is a measure of average income per person in a country. GDP per capita divides the GDP by the population.
The Gross Domestic Product per capita in Pakistan was last recorded at 818.87 US dollars in 2014. The GDP per Capita in Pakistan is equivalent to 6 percent of the world’s average. GDP per capita in Pakistan averaged 489.98 USD from 1960 until 2014, reaching an all-time high of 818.87 USD in 2014 and a record low of 219.37 USD in 1960. GDP per capita in Pakistan is reported by the World Bank.
- Pakistan GDP per capita (PPP):
Purchasing power parity (PPP) is a technique used to determine the relative value of different currencies. The concept of purchasing power parity allows one to estimate what the exchange rate between two currencies would have to be in order for the exchange to be at par with the purchasing power of the two countries’ currencies.
For example, suppose that two countries produce the same physical amounts of goods as each other in each of two different years. Since market exchange rates fluctuate substantially, when the GDP of one country measured in its own currency is converted to the other country’s currency using market exchange rates, one country might be inferred to have higher real GDP than the other country in one year but lower in the other; both of these inferences would fail to reflect the reality of their relative levels of production. But if one country’s GDP is converted into the other country’s currency using PPP exchange rates instead of observed market exchange rates, the false inference will not occur.
The Gross Domestic Product per capita in Pakistan was last recorded at 4619.28 US dollars in 2014, when adjusted by purchasing power parity (PPP). The GDP per Capita, in Pakistan, when adjusted by Purchasing Power Parity is equivalent to 26 percent of the world’s average. GDP per capita PPP in Pakistan averaged 3669.26 USD from 1990 until 2014, reaching an all-time high of 4619.28 USD in 2014 and a record low of 2961.11 USD in 1990. GDP per capita PPP in Pakistan is reported by the World Bank.
- Pakistan Inflation Rate:
Low inflation rate is self-explanatory. The inflation rate in Pakistan was recorded at 1.72 percent in August of 2015, the lowest since July of 2003. Inflation Rate in Pakistan averaged 7.96 percent from 1957 until 2015, reaching an all-time high of 37.81 percent in December of 1973 and a record low of -10.32 percent in February of 1959. Inflation Rate in Pakistan is reported by the Pakistan Bureau of Statistics.
- Pakistan Food Inflation:
Cost of food in Pakistan decreased 0.57 percent in August of 2015 over the same month in the previous year. Food Inflation in Pakistan averaged 6.53 percent from 2011 until 2015, reaching an all-time high of 12.99 percent in November of 2013 and a record low of -1.05 percent in April of 2015. Food Inflation in Pakistan is reported by the Pakistan Bureau of Statistics
- Pakistan Interest rate:
Interest rates are another important indicator of economic growth. They represent the cost of borrowing money. These rates change as a result of economic and market events.
When the rate increases, banks and other lenders have to pay higher interest rates to obtain money. They, in turn, lend money to borrowers at higher rates to compensate, which thereby makes borrowers more reluctant to take out loans. This discourages businesses from expanding and consumers from taking on debt. As a result, GDP growth becomes stationary.
The central bank of Pakistan reduced interest rates to a 42-year-low of six per cent, after inflation fell dramatically. It is the fourth rate cut this year. Interest Rate in Pakistan averaged 11.86 percent from 1992 until 2015, reaching an all-time high of 19.50 percent in October of 1996 and a record low of 6.50 percent in May of 2015. Interest Rate in Pakistan is reported by the State Bank of Pakistan.
- Pakistan Exports:
When the level of exports of a country increases the national income of that country will increase. An increase in exports means that more employment opportunities have emerged in the nation, more exports means more goods have been produced which require more labor. An increase in exports will also improve the balance of trade of a country.
Exports in Pakistan increased to 187737 PKR Million in August from 162532 PKR Million in July of 2015. Exports in Pakistan averaged 35468.07 PKR Million from 1957 until 2015, reaching an all-time high of 275483 PKR Million in September of 2013 and a record low of 51 PKR Million in April of 1958. Exports in Pakistan is reported by the Pakistan Bureau of Statistics.
- credit ratings:
Credit ratings give investors insight into the level of risk associated with investing in a particular country and also include political risks. At the request of the country, a credit rating agency will evaluate the country’s economic and political environment to determine a representative credit rating. Obtaining a good sovereign credit rating is usually essential for developing countries in order to access funding in international bond markets.
Another common reason for obtaining sovereign credit ratings, other than issuing bonds in external debt markets, is to attract foreign direct investment. To give investors’ confidence in investing in their country, many countries seek ratings from credit rating agencies like Standard and Poor’s, Moody’s, and Fitch to provide financial transparency and demonstrate their credit standing.
Pakistan’s credit ratings from S&P, Moody’s, Fitch (updated today 15-09-2015) & TE in comparison to other countries like Australia, Bangladesh, Canada, China, France, Germany, India, Philippines, Singapore, South Africa, Sri Lanka & Turkey.
- Pakistan Remittances:
Remittances constitute an important mechanism for the transfer of resources from developed to developing countries. Actually the term “remittances” can be defined as financial inflow to home country from abroad by migrant. It has become an important source of foreign exchange earnings for developing economies. The remittance is paramount indicator of economic condition for the remittances recipient’s economies
Remittances in Pakistan increased to 5125 USD Million in the second quarter of 2015 from 4347 USD Million in the first quarter of 2015. Remittances in Pakistan averaged 2271.79 USD Million from 2002 until 2015, reaching an all-time high of 5125 USD Million in the second quarter of 2015 and a record low of 906 USD Million in the third quarter of 2003. Remittances in Pakistan is reported by the State Bank of Pakistan.
- Pakistan Foreign Exchange Reserves:
Foreign Exchange reserve can be defined as deposits of a foreign currency held by the central bank of a country. It is important for a country to have good amount of foreign exchange reserves, it increases the confidence in the monetary and exchange rate policies of the government, it enhances the capacity of the central bank of the country to intervene in the foreign exchange market and control any adverse movement and stabilize the foreign exchange rates to provide a more favorable economic environment for the progress of the country, during time of any crisis foreign exchange reserves come to the rescue of any country so as to absorb the distress related to such crisis.
Foreign Exchange Reserves in Pakistan increased to 18816.80 USD Million in July from 18705.70 USD Million in June of 2015. Foreign Exchange Reserves in Pakistan averaged 13847.23 USD Million from 1998 until 2015, reaching an all-time high of 18816.80 USD Million in July of 2015 and a record low of 1973.60 USD Million in December of 1999. Foreign Exchange Reserves in Pakistan is reported by the State Bank of Pakistan.