Economy of Pakistan 1

Pakistan ranks as one of the fastest growing economies in Asia. With the exception of the 50s and 70s, Pakistan's
annual GDP growth rates have usually exceeded six percent reaching as high as 8.7% during the 1980s. A brief of
economic situation in year 2004 is given below.
Real GDP growth in the fiscal year 2003-04, once again, surpassed the target (5.3%) with a headline number of 6.4
percent compared to last year's 5.1 percent rate. This buoyant growth was aided by a 13.1 percent and 5.2 percent
growth in the manufacturing and services sectors, respectively. When compared with other developing countries in
general and East and Southeast Asian countries in particular, Pakistan's growth performance has been quite impressive.
Development nations grew, on average, by 6.1 percent while East and Southeast Asian countries like Hong Kong,
Singapore, Korea, Indonesia, Malaysia, Philippines, Bangladesh and Sri Lanka registered growth rates ranging from 1.1
percent to 5.5 percent in 2003-04.
Total investment rose to 18.1 percent of GDP in 2003-04 against 16.7 percent last year. Most importantly, fixed
investment rose sharply to 16.4 percent of GDP against 14.8 percent last year. What is highly encouraging is the
significant rise in private sector investment - from 11.2 percent to 11.7 percent of GDP. This year's growth is
overwhelmed by massive investment in large-scale manufacturing by the private sector which grew by 25.4 percent
during the year.
Controlled inflation has also been one of the hallmarks of this government's macroeconomic policies. The rate of
inflation as measured by changes in the Consumer Price Index (CPI) averaged 3.9 percent during the first ten months of
the current fiscal year against 3.3 percent in the same period last year.
Another landmark achievement of the outgoing fiscal year has been impressive growth in the share index of the Karachi
Stock Exchange (KSE) - rising form 3403 points on June 30, 2003 to 5430 points on April 30, 2004 - an increase of 2027
points or 59.6 percent during the period. In terms of US dollars the market capitalization of the KSE surged to $25 billion
from $12.92 billion during the period. A number of factors have contributed to the persistence of the bullish trend in the
stock market which include: continuation of pro-growth economic policies; stable macroeconomic environment;
accelerated economic growth; stable exchange rate; brisk pace of privatization through the capital market; visible
improvement in the Pakistan - India relationship; availability of adequate liquidity in the market; good operating and
financial results from the majority of blue chip companies and appropriate reforms.
Pakistan also succeeded in attracting $760 million in Foreign Direct Investment (FDI) during July - April 2003-04 against
$696 million in the same period last year, thereby registering an increase of 9.3 percent. The bulk of the FDI has come
in the oil and gas, telecom, transport and communication, and banking sectors.