Economics & Business

Four Pakistani economic indicators in the red

ISLAMABAD: Four out of eight key economic indicators of Pakistan are in the negative zone during the July-October period of the ongoing fiscal year 2010-11 as compared with the same period last fiscal year. Inflation, foreign investment, trade deficit, large scale manufacturing exhibited negative growth, while tax collection, foreign exchange reserves, remittances and current account deficit improved.

According to a comparison of inflation of regional countries presented in the Economic Coordination Committee’s (ECC) meeting, people of Pakistan were ranked at the top with yearly percentage change in consumer price index (CPI) inflation at 15.3 per cent as of October 2010, India 10.3 per cent as of August 2010, Bangladesh 8.1 per cent as of September 2010, Sri Lanka 7 per cent and China with the lowest at 4.9 per cent.

Inflation: Inflation based on CPI, wholesale price indicator (WPI) and sensitive price indicator (SPI) have witnessed a huge increase during the first four months of July to October period of the ongoing fiscal year 2010-11 as compared with same period of last fiscal year.

Inflation based on CPI was recorded at 8.9 per cent during the month of October 2009, which jumped to 15.3 per cent in October 2010. Inflation based on WPI was recorded at 3.8 per cent by the end of October 2009, which also surged to 23.8 per cent by the end of October 2010. Inflation based on SPI was 6.7 per cent by the end of October 2009 and rose to 20.9 per cent by the end of October 2010. Core inflation was the only indicator, which decelerated and declined from 11 per cent in October 2009 to 9.3 per cent in October 2010.

Food inflation based on CPI jumped from 7.5 per cent in October 2009 to 20.1 per cent in October 2010, non-food inflation was at 10 per cent in Oct 2009 and increased to 11.3 per cent by October 2010 and the most important inflation based on energy prices increased from 4.9 per cent in October 2009 to 21.9 per cent by October 2010.

Large-scale manufacturing: The large-scale manufacturing (LSM) during the first quarter July-September period of the ongoing fiscal year 2010-11 witnessed a negative growth of 1.5 per cent as compared with the same period of last fiscal year. According to the latest figures of LSM, which were submitted to the last ECC’s meeting, LSM exhibited a growth of 3.1 per cent in the first month of July 2010 as compared with a growth of 0.6 per cent in July 2009.

LSM suddenly witnessed a negative growth of 3.6 per cent in the second month of August 2010 as compared with a growth of 0.9 per cent in August 2009. A further negative growth of 2.6 per cent in LSM was recorded in September 2010 as against the negative growth of 2.6 per cent in September 2009.

Foreign investment: Pakistan witnessed a decline of 36 per cent during the first four months (July-October) period of the current fiscal year 2010-11. It declined from $885 million in 2009-10 to $569 million in 2010-11. Foreign private investment during July to October period of last fiscal year 2009-10 was recorded at $895 million, which decreased to $608 million in the same period during the ongoing fiscal year 2010-11, showing a negative growth of 32 per cent.

Foreign direct investment (FDI) in the country during July to October period of the last fiscal year 2009-10 was recorded at $596 million and latest figures revealed that FDI witnessed a decline of 22 per cent to $468 million in the same period of the ongoing fiscal year 2010-11. Portfolio investment in the country also witnessed a 53 per cent decrease during July to October period of the ongoing fiscal year 2010-11, which total at $298 million, as against $140 million in the last fiscal year 2009-10.

Foreign public investment recorded a negative growth of $10 million during July to October period of the last fiscal year 2009-10 as against negative growth $39 million during July to October period of 2010-11.

Current account deficit: According to figures presented in the ECC’s meeting on last Tuesday, the current account deficit was recorded at $2.172 billion by the end of October 2009, which declined to $36 million only by the end of October 2010.

Federal tax collection: With an upward revised target of Rs1.689 trillion for the entire fiscal year 2010-11, collection during July to October period of the ongoing fiscal year witnessed a growth of just seven per cent and collection totalled at Rs399 billion as compared with a collection of Rs372 billion in the same period of last fiscal year 2009-10.

Out of the direct taxes with a total collection target of Rs658 billion for the entire fiscal year, the Federal Board of Revenue managed collection of Rs132 billion in July to October as against Rs129 billion in the same period of last fiscal year, projecting an increase of two per cent. Sales tax collection with an upward revised collection target of Rs675 billion amounted to Rs182 billion in first four months of this fiscal year as compared with Rs159 billion in the same period of last fiscal indicating an increase of 14 per cent.

Federal excise duty collection witnessed a negative growth of 6 per cent with collection at Rs36 billion in the first four months as against the collection of Rs38 billion in the same period of last fiscal year. Customs duty collection witnessed a growth of just eight per cent in the first four months to Rs49 billion as against Rs46 billion in same period of last fiscal year.

External trade: Pakistan’s exports during the first four months July to October period of the ongoing fiscal year witnessed a growth of 19 per cent with total exports at $7.2 billion as against the exports of $6 billion in July to October period of last fiscal year 2009-10. Imports, however, projected a growth of 16 per cent with total imports at $12.2 billion in

July to October period of ongoing fiscal year as compared with imports of $10.6 billion in the same period of last fiscal year. Trade deficit projected an increase of 12 per cent during the first four months with a total deficit at $5.1 billion as compared with $4.5 billion in same period of last fiscal year.

Input from Agencies

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Haroon Akram Gill

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