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Essay on current economic situation of pakistan

  1. Services sector expansion at 8.
  2. Thus in 2018 the country may witness considerable price hike. For instance the supply of power to industrial and residential consumers is expected to improve considerably with new power plants likely to become operational in 2018 and beyond.
  3. Decline external financing flows, so the government borrowed from SBP which caused monetary expansion, continuous Defense Budget. Inflation due to rise in oil prices, food, removal of food subsidy, devaluation of Rupee, higher import price, Government borrowing from State Bank Rs.
  4. It may be mentioned here that when the central bank withdrew its support on December 13th, Pakistani rupee was hit hard, adversely affecting the currency.

Due to the fall in Rupee the economy has suffered. It may be mentioned here that when the central bank withdrew its support on December 13th, Pakistani rupee was hit hard, adversely affecting the currency. Pakistani rupee has always remained between 104 and 105 per dollar since 2015, but in last three sessions it lost its value by over 5 percent.

The outcome of the devaluation of Rupee against US dollar in the domestic market incidentally coincided with a rise in the crude oil prices in the global market resulting in an upward trend in oil prices from January 2018. The trend will obviously result in increase in the manufacturing and transportation cost resulting in price hike of all the commodities produced locally. Thus in 2018 the country may witness considerable price hike. Finance managers of the country must therefore, take all possible measures to maintain price hike to an acceptable level.

With no major change in extreme issues like electricity and gas shortage, unemployment, and poverty, Pakistan may continue to face the problem of fiscal consolidation. On the other hand balance of payments issue may pose very serious risks to economy during the next fiscal year, mostly because of ballooning deficits and erosion in foreign exchange reserves down the line.

The business community also expects the next year to be full of challenges. Keeping in view the liquidity position the government may be left with no choice but to cut its non development and administrative expenditures to reduce essay on current economic situation of pakistan deficit.

The debt servicing is also a major non development expenditure that is hampering the economic growth badly. It may be mentioned here that the economy of Pakistan is the 25th largest in the world as far as purchasing power parity PPPand 38th largest concerning nominal gross domestic product. There is no doubt that Pakistan is a land of opportunities but the sad fact is that it has never been tapped sincerely and honestly.

How did we come to this? Time has come for our financial gurus and planning experts to come out with a convincing answer to such burning questions.

There is indeed something to rejoice also. For instance the supply of power to industrial and residential consumers is expected to improve considerably with new power plants likely to become operational in 2018 and beyond. Moreover, developments like import of liquefied natural gas LNG to improve the shortage of gas for industrial sector and the addition of a second LNG terminal at Port Qasim would go a long way in boosting the economy.

The number and fierceness of terrorist incidents is declining which will very positively affect the investment market as the foreign entrepreneurs reluctant to come in Pakistan will start coming in. Essay on current economic situation of pakistan positive developments supported by a very well planned fiscal policy may help in stabilizing the economy. But then the future course of our economy will largely depend on the institutional aspects of an economy or society, covering features such as corruption, transparency, rule of law, the burden of regulations, the extent of trust and social capital and so on.

Situation is expected to improve rapidly if the Privatisation Commission is able to get rid of white elephants like Pakistan Steel Mills, PIA and few other organizations now surviving on heavy grants from the government.

Current Economic Situation of Pakistan

It is hoped that the existing political uncertainty will fade out with the passage of time, potentially affecting new investments in the country. As we know companies, especially foreign ones, are not interested to know which party forms the government, what they actually care about is political certainty and sustainable economic policies so that they can better plan their long term investments and profit margins.

As such the political point-scoring and differences in points of view of the government and opposition parties can never go down well among those who are carefully monitoring the situation, be it political or purely economic. Owing to weak domestic policies and slow world economic growth, Pakistan is not getting enough FDI. The government is also facing pretty tough challenges to increasing tax revenues by eliminating structural flaws in the tax system.

Just when the economic growth should be touching 6 to 7 percent to provide jobs to the growing workforce, the government is failing to take it to even 5 percent. According to Asian Development Bank ADB Outlook in fiscal year 2018, projections for growth and inflation are maintained, but the current account deficit is expected to exceed the earlier forecast again by a wide margin. State Bank predicts that on the flip side, the external and fiscal accounts may remain under pressure.

This pressure is coming from likely elevated import demand and increase in public spending, by provincial governments in particular. The increased spending by the government is to complete development projects before the upcoming general elections in the country.

The fiscal year essay on current economic situation of pakistan budget envisages fiscal deficit at 4. Achieving this target may be challenging, given the capital spending requirement of the government for completing various projects under CPEC and likely increase in provincial spending during the election year.

  1. Encouraging trends in private sector credit indicate underlying dynamics in real economic activity.
  2. When you today has now gift catalog current situation of economic problems.
  3. It may be mentioned here that the economy of Pakistan is the 25th largest in the world as far as purchasing power parity PPP , and 38th largest concerning nominal gross domestic product.
  4. Into account and regulations. The debt servicing is also a major non development expenditure that is hampering the economic growth badly.
  5. Need is for restoring confidence of people who have potential to achieve all the colors of rainbow. This pressure is coming from likely elevated import demand and increase in public spending, by provincial governments in particular.

Moreover, any shortfall in revenue may keep the fiscal deficit close to fiscal year 2017 level. The economy is likely to continue to expand with low and stable inflation in fiscal year 2018. Encouraging trends in private sector credit indicate underlying dynamics in real economic activity. However, maintaining this momentum going forward would largely depend on addressing emerging challenges in external and fiscal accounts, the report added.

It is undoubtedly a massive project which offers huge economic benefits to the people of Pakistan and the region. According to recent estimate CPEC will serve three billion people, nearly half of global population. Thus a huge economic bloc is about to emerge from this region, in fact, from Pakistan.

CPEC is intended to rapidly modernize Pakistani infrastructure and strengthen its economy by the construction of modern transportation networks, numerous energy projects, and special economic zones. All said and done World Bank Report also does not predict any significant positive economic growth in Pakistan.

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The report said that Persistent policy uncertainty could dampen confidence and investment. Amid exceptionally low financial market volatility, a sudden market reassessment of policy-related risks or of the pace of advanced-economy monetary policy normalization could provoke financial turbulence. Over the longer term, persistently weak productivity and investment growth could erode long-term growth prospects in emerging market and developing economies that are keys to poverty reduction.