Risks to economy growing.. State Bank.

Society Pakistan & World Affairs
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More evidence that things arent going well with the economy…

State Bank says growth will be lower this year… Mush supporters wont accpet this either.

Risks to economy increasing, says State Bank

By Shahid Iqbal

KARACHI, Jan 5: All key performance indicators recorded a significant decline during the first quarter of the current financial year and the resulting imbalances could have adverse consequences for the economy, the State Bank of Pakistan said in its quarterly report, released here on Saturday.

The July-September report noted that the political uncertainty ahead of the coming elections was impacting on investor sentiment.

“Risks to the economy are increasing as it is clear that neither the global nor the domestic economic environment is as benign as in the past years,” it added.

The government was relying heavily on borrowings from the State Bank, which added to the reserve money growth, the report said.

“The threat of renewed macroeconomic complications, after five years of good performance would be further heightened if prompt actions are not taken to correct the recent deterioration in fiscal indicators,” the report said.

The fiscal imbalance has already led to a substantial rise in government borrowings from the central bank. The borrowings rose to Rs191.3 billion during the first five months of the current year (2007-08), exceeding both quarterly and annual ceilings and the preceding year’s trend.

“This has enhanced monetary expansion significantly and is likely to fuel inflationary pressures, compounding the impact of the strength in international commodity prices,” warned the SBP.

The 2007-08 growth was also likely to be below the 7.2 per cent annual target, it said.

“The current trend indicates that the fiscal deficit target will not be met unless appropriate corrective measures are taken promptly,” the SBP said.

The report said that all key fiscal performance indicators had deteriorated significantly in Q1-FY08 (July to Sept 2007). The government’s budgetary borrowings from the banking system during July-1st Dec FY08 rose by Rs191.3 billion compared to Rs97.6 billion over the corresponding period in FY07.

“Importantly, the revenue balance moved from a surplus in the first quarters of the preceding years to a deficit in Q1- FY08, despite an impressive growth of 22.3 per cent in total revenues during Q1-FY08,” said the report.

Another challenge was the country’s large external current account deficit. Recent evidence indicated that the modest contraction seen in July-September 2007 was unlikely to continue in months ahead, it said.

The report said the annual current account deficit remained large while the SBP predicted that the annual FY08 deficit could remain at around 5.2 per cent of GDP, very close to the levels seen in the previous fiscal year.

“More troubling is the fact that the high and volatile food inflation is now increasingly influencing core inflation as well. Since May 2007 both measures of core inflation (i.e. non-food non-energy and the 20 per cent trimmed mean) have been trending up.

“These inflationary pressures could rise further, if fiscal imperatives force the government to pass through the impact of the recent oil prices,” the SBP report said.“The domestic economy is now more open and prone to external shocks than ever before which means domestic prices will be more sensitive to the changes in international prices, despite domestic availability. For example, Pakistan had sufficient exportable surplus of rice in FY07, but following a rise in the international prices of rice, domestic prices also increased,” it said.

The report said that the LSM (Large Scale Manufacturing) production data for Q1-FY08 suggested a deceleration in growth that reached only 6.9 per cent, the lowest since FY03 during this period.

The aggregate growth of LSM had decelerated in Q1-FY08, although disaggregate data revealed a mixed picture. The first quarter outcome of a larger number of industries reflected slower growth, said the report.

http://www.dawn.com/2008/01/06/top1.htm

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Re: Risks to economy growing.. State Bank.

Inflation higher than projected, growth rate also below expected... God bless our new Quaid-e-Azam Musharraf

The Random Thread
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Re: Risks to economy growing.. State Bank.

so when the state bank was saying pakistans economy is booming with 8% growth rates, you thought they were lieing, now state bank say growth will be lower you blinded people suddenly start jumping in joy like you just hit a jackpot :CareBear::CareBear::CareBear:

whats wrong with you, first of all learn how to read, as all the report is saying is that the growth will be slow due to political unstability, so cut your celebrations short as its not what you are thinking.

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Re: Risks to economy growing.. State Bank.

Yaar pp and spoky enough with lying, did you even bother to read the whole article?

SB says international credit market crises, demand of product will be dangers for economy? So its all coz of mushi.. Right

Did you even know what's happening in us securities, bond and mortage markets?

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Re: Risks to economy growing.. State Bank.

forget talking about economics to them, they probably havnt even heard of the word economics before.

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Re: Risks to economy growing.. State Bank.

When did I say I didnt believe them?
But I know you believe them, so read the article yourself... Economy isnt doing well.

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Re: Risks to economy growing.. State Bank.

Now we are liars for quoting the STATE BANK! And where did I specifically say I blamed Mush?

Now your just making Assumptions, so you know what that makes you...

Point is, we are tired of you Mush fans trying to tell us everything is fine when in reality it is completely the other side of the coin..

Comment on the article if you want, personal attacks are just a sign of a weak argument.

By the way, what will it take before you realize that the govts job is to foresee such things and prepare the country for such outcomes? If Mush govt is soooo succesful, why is the economy so exposed and vulnerable?

Honestly buddy, you need to start thinking outside of the Mush box... Time to start seeing reality.

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Re: Risks to economy growing.. State Bank.

I dont debate economics with kids in High school...

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Re: Risks to economy growing.. State Bank.

you clearly said the figures given by them were fabricted, now what happened :CareBear::CareBear::CareBear::CareBear::CareBear::CareBear:

Do you consider yourself 'weird'?
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Re: Risks to economy growing.. State Bank.

a person who cant even read an article properly does not deserve to talk about economics of any kind, not even to toddlers.

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Re: Risks to economy growing.. State Bank.

I think govt figures are fabricated, and they often are... The exagerate things regularly. Thats an open secret and everyone knows it, thats why analysts around the world dont take govt figures seriously. Development figures in particular are almost laughable. Most people dont buy most of Mush govt development figures.

If you didnt know that, then what am I supposed to tell you?

State Bank figures are usually ok as far as economic figures go..
You im sure feel the State Bank is accurate so you feel free to debte the validity of what the SB is stating...

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Re: Risks to economy growing.. State Bank.

:CareBear::CareBear::CareBear::CareBear::CareBear: :CareBear:
the only thing laughtable is your ignorant posts.

for you information, all the economic figures are given by the state bank and approved by the world bank, you must be really blinded in hate so reject figures like that, even CIA lists them in their world fact book, all leading investment banks such as goldman sach, jpmorgan etc, approve them and advise business/corporates/multinationals etc. to conduct business there, thats why you see many foreign business coming to pak nowadays and FDI hitting $8 billion, because these investment banks have seen a potential and tell that to companies.

well you will obviously be blinded by the facts and even reject pakistan if it becomes the worlds most powerfull nation, so theres nothing new there.
you are the one who rejected there figures when they said poverty has droped from 36% to 24%, you are the one who rejected them when they said economy is growing at 7%, you are the one who rejected them when they said FDI has hit $8 billion and now they said economy is going to grow slower this year due to political situation, not only do you read the article wrong but also start jumping in joy :CareBear:

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Re: Risks to economy growing.. State Bank.

Well keep laughing... I dont expect much from you...
Jp Morgan and you should be happy together... Your figures are as meaningless and contrived as Musharafs Oath of the "presidency"... There is no investment in Pak, and the economy is nose diving... We have all given you proof, you havent provided anything but pictures of decrepid fly overs in Karachi...
Have fun...

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Re: Risks to economy growing.. State Bank.

Yaar, there are so many people that do not understand figures and even if it is spelled to them, their hate of Musharraf is such that they could not see or appreciate figures, or what happened during last 8 years of Musharraf rule. These people would love to migrate to west to make their own personal life better, but when it comes to Pakistan or life of poor Pakistanis in Pakistan, they hate to see them benefiting with good economical prospects and opportunity.

There are some figures that may get fabricated but some figures are impossible to fiddle, else past corrupts like NS and BB would have done that.

Here are 10 of many unprecedented economical figures of Musharraf government that can not be fiddled and would be remembered forever after Musharraf would leave are:

One: Unprecedented economical growth: Pakistan GDP grew from $62 billion dollars in 1999 to $146 billion dollars in 2007. Such growth is highest ever that happened during any past regimes (Ayub, Yahya, Bhutto, Zia, BB or NS). That is 11.3 percent compound growth a year in dollars … highest ever.

Two: Unprecedented per capita income growth: Pakistan per capita income grew from $440 in 1999 to $930 in 2007. Such growth is highest ever that happened during any past regimes (Ayub, Yahya, Bhutto, Zia, BB or NS). That is 9.8 percent compound growth a year in dollars … highest ever.

Three: It is first time in Pakistan history that Pakistan paid more interest on inherited debt than new loan borrowed. For instance, Pakistan debt in 1999 was around 72 billion dollars [34 billion dollars internal debt (over Rs 1600 billion) and 38 billion dollars external debt]. Musharraf government paid around 80 billion dollars interest on inherited debt over last 8 years, but debt only increased by 10 billion dollars. It shows that Musharraf government paid a lot of interest without increasing the debt and thus kept the debt under control.

In past, no government paid more interest on inherited debt than what they borrowed. So, what happened in Pakistan debt front is unprecedented in Pakistan history. If Musharraf government had not borrowed anything but just borrowed enough to pay interest on inherited debt … today Pakistan debt would have been over 170 billion dollars (because there would have been interest on money borrowed to pay interest). Present debt is around 82 billion dollars (42 billion dollars internal debt and around 40 billion dollars external debt)

Four: Unprecedented stock market growth: During last 8 years Pakistan stock market has increased from less than 1200 to around 14500 … or 1200 percent; that comes to around 37 percent compound growth a year (this is very rare even anywhere in the world … as this happens only in country that goes through very rapid growth, and that is what happened in Pakistan).

Five: Unprecedented Federal Tax collection increases of over 300 percent in last 8 years (from Rs 302 billion to around Rs 900 billion), and that is around 15 percent compound growth a year.

Six: Unprecedented export increase for Pakistan of over 200 percent in last 8 years (from 7.8 billion dollars in 1999 to around 17 billion dollars in 2007), and that is better than any past regime. It comes to around 10 percent compound growth a year in dollars.

Seven: After partial floatation of rupee by Zia, one of the most stable period of rupee exchange rate in terms of dollar, such that Musharraf government completely floated rupee. Rupee devalued in open market by 14 percent in 8 years or on average compound rate less than 2 percent a year.

Eight: Lowest rupee interest rate since 1970.

Ninth: Highest net increase in wages ever of over 85 percent during last 8 years (percentage increase in wages divided by percentage increase in prices).

Ten: This is first time in Pakistan history that government has facilitated loan access to even poorest of the country so that they can make their life better, else in past this was privilege of only rich, connected and resourceful.

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Re: Risks to economy growing.. State Bank.

Saleem, bhai. You have given these long posts before, and you have accused other of being either idiots or completely ill informed before... And I think your over estimate yourself and Mush supporters and underestimate the everyone else... And by everyone else, I mean just about any economist of worth.

Fact is that the people who deny your claims to unprescendted growth actually DO know how to read figures...

All you provided is fact, but the question is not that Paks economy grew, but the nature of that growth.
The type of growth has been such that its only benefited a select few, while leaving the poor where they were or even poorer...
The rise in income was seen only among the rich, and it was limited to certain areas...

The problem with you people is you keep beating a dead horse... You dont like to talk about the fact that MANY qualified analysts are prodicting that the economy is not performing well and this growth is unsustainable. Now the State Bank is even saying this, which analysts have been saying since late 2006...

And even a cursory glance at Pak history attests to the fact this growth has always come when the Military is in power and when America is doing the funding... As soon as they leave, Pak returns to its low growth.

You can accuse us of not knowing how read figure, but what about everyone else who is qualified and has come to the same conclusion... That growth has increased the gap between rich and poor, and that in the long run, unless some serious steps are taken, the economy will not grow.

Member/Team of the month - May Winner
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Re: Risks to economy growing.. State Bank.

Meray bhai, in reply to your post I would just ask you two question and would like to see if you would answer that fairly or not :)

**Question one: **State bank in above report says:

[quote]
The 2007-2008 growth was also likely to be below the 7.2 percent annual target, it said.
[/quote]

Now tell me that does state bank report says that how low the growth would be? Do you think that target is always achieved? State Bank gave their estimate and one cannot say until all readings are evaluated and that would happen by Oct/Nov 2008 (even provincial figure would come by July 2008) ... right? Still, suppose Stata Bank is accurate in their assessment and growth comes below 7.2 percent ... let say 7 percent, than would that going to be low growth rate? Can you tell me of any year when 'BB and NS' government had 7 percent or above growth rate?

I think that if Pakistan growth rate would be 6 percent during 2007-2008 than also it would be good growth rate (though I still believe that Pakistan may achieve over 7 percent gorwth rate for year 2007-2008).

Another question: In 1999 it was very difficult to even get land line phone for many. Today there are over 70 million Pakistanis that have mobile phones. Pakistan has 160 million people, most are kids. There are around 80 million voters (shows that reat are too young to vote). Most mobile phone holders must be adults ... those that can vote. That shows that over 85 percent Pakistani adults have mobile phone.

Now, do you think that those who have mobile phone are poor? Well, if they are than a country where poor have enough spare cash to get mobile phone than certainly prosperity has reached poor too. Don't you think so? :)

[Note: I am not going on many other indicators that shows properity in Pakistan did reached poor too ...as I beleive that for those that would not like to believe, nothing can convince them]

Wt Ix Ur Mood Today
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Re: Risks to economy growing.. State Bank.

Saleem jii..
The point of the article is to highlight the fact that there are some large hurdles in the way of the economy..

Fine growth isnt 7.2 but 7 percent… The point remains that the economy isnt all peaches and cream… Accorind to many QUALIFIED analysts, the following year it will be even less unless something is done to rectify this problem…
I hope your right about growth rate, but why deny the obvious?

And I believe it was Zak who said it best, “Are people supposed to eat their cell phones?”
I mean, its an erroneous conclusion that is filled with many holes…
I think Mobile phones have gotten cheap enough for people to afford, and its something that they will sacrafice for because its a necessity… But how do you know the incomes grew? Perhaps its the price of cell phones that went low enough for manyh more people to afford somehow.

Its like if the govt made cheap schools that more people could afford, and more people started sending their kids to school, does that mean their incomes grew? Absolutely not, its that the school tuituon is far cheaper and within their income range.

But why are you in denial of the MANY MANY reports which have stated that the poor have gotten poorer in Paktan or havent seen any change in their life style?

Care to explain to the ACTUAL QUALIFIED analists why they percieve no change in the life standards and incomes of Pakistanis poor, when you and other Mush supporters clearly have proof to the contrary?

There is an obvious contradiction between what you and the rest of the Mush supporters say, and what the ACTUAL QUALIFIED ANALYSTS say about the state of the economy and wealth dictribution in the country… Who should we believe??? :confused:

Aaj Kiss Baat Par Gussa Aaya ??????
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Re: Risks to economy growing.. State Bank.

Well, do not believe me on growth rate figures … go to www.statpak.gov.pk and check yourself … over 7 percent is good growth.

Anyhow, only QUALIFIED figure is the one that comes after year end … and no analysts can give a figure better than ministry of finance, as they plan their future finance relying on their own future growth analysis.

True, some figures given by ministry of finance could be propaganda but that propaganda only works on those that do not follow true figures that comes after the year and their past performance can be used to trust their future figures or consider that propaganda (though their figures does not mean that it has to happen).

As for outside analysts, they may write their estimated analysis but again they do not have enough information to say something with certainty. On the other hand, many outside government economical analysts use their analysis for propaganda, nothing else,

I do not believe that people would sacrifice their bread for mobile. Another thing is that, mobile or phone is not necessity until one makes it necessity. Before 1999, 90 percent of Pakistanis use to live without phone and use to survive.

Answer to what Zak said (according to you) … that ‘are people suppose to eat their cell phones?’ … is that … ‘YES’, people are suppose to eat their cell phones … IF they do not have much to eat. That means, people that have nothing to eat should not have mobile but should get bread and that is what all do. Only people get mobile when they have more than what they need to eat.

I have seen such reports since many years … and most of the time they are nothing but BS. These people most of the time write absurd and their purpose is only propaganda. They write for people who do not follow true figures and those that follow true figures know when an analysts are B-shiiiting and when they are making sense.

In the end, true collected figures are only truth and I prefer to see what happened in truth and judge from what is there in those figures. I do read and see what propaganda machines known as analysts are predicting about future, but do not take their words blindly.

For instance, no one can deny that Pakistan federal tax collection has increased 300 percent … and all know that tax increase when economy grows … right? So, it shows that economy has grown :slight_smile: If analysts sys that economy has not grown than should I beleive that analysts? :slight_smile:

[Well, apart of federal tac collection … one can check Pakistan economy on www.statpak.gov.pk too … plus growth rate]

No one can deny that Pakistan stock exchange capitalization increased from less than 5 billion dollars in 1999 to over 60 billion dollars in 2007. Similarly, no one can deny that shares that use to pay 50 paisa dividend in 1999 (or even no dividend) are paying Rs 6 dividend today. So it shows that country industry is booming, investment is booming and economy is vibrant. If analysts says different than I consider him liar (because I know that as fact).

All can find out that minimum pay in Pakistan government service was around Rs 1200 in 1999 and today it is Rs 4600 … than anyone that says that wages has not increased over 300 percent, than I could not trust that person.

Well … I check ground reality over last many years and than make opinion … not because some paid analysts wrote something for purpose of propaganda (working for vested interests).

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Re: Risks to economy growing.. State Bank.

I think the Analysts im refering to actually DO lok at the figures and information provided by state bank and ministry of Finance… Analysis isnt based on guess work, its actual research. And as you said yourself, all the info is out there, you just have to look it up.
Its seems very conveniant that you would undermine the credibilty of outside qualified analysts…

Maybe a mobile phone has become a neccesity, people want to and need to stay in touch with their families… And how do you know people are sacraficing their cell phone for food? What is your source? Unless you can provide me with some credible data on the relation between income and cell phones, then its all here say… On our part, we can provinde you with actual research that staes that Pakistan poor have either gotten poorer or stayed where they were. Not only that, there is TONS of reports from the people themselves on the ground, who state the that they have either gotten poorer or stayed where they were?
All you have is an unsubtantited link between cell phones and income.

Federal Tax collection has gone up, no doubt… But who is it that is paying these taxes? Which segment of the population is bearing most of the tax expense?

The Stock market, like I said, only benefits a celect few within the society… The rich and almost rich grew richer or became rich… But besides that, what effect did the stock market have on the poor?
Again, you beating a dead horse, we already know all this about the growth of the economy… It actually about the nature of the growth, not the growth itself that is in question.

Incomes did rise, but for a very select group of people… A minority which were already well off.

Now you can conveneinetly ignore outside analysts, but they do the same thing you claim to do… They look at the figures that the govt puts, and review the same ground realities, and they come up with completely different conclusions from you… This despite the fact that they again, cite govt figures just like you do.. They dont make this stuff up!
And I dont know your credentials, but the people that make these analysis are pretty damn well qualified to do so…

As for propaganda, then the EVERYONE who is qualified that doesnt work for the govt who agree that Paks economy is lop sided, that growth the income gap and rich poor divide has risen and that the Pak Economy faces serious threats is just a propagandist…

Its obvious that no amount of evidence is going to be enough for you as everything is just propganda if its not from the govt… :rolleyes:

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Re: Risks to economy growing.. State Bank.

PaKpatriot1: Brother, forget everything ... what about minimum official wage in Pakistan?

What I know, it was around Rs 1200 in 1999. In 2007 minimum wage was increased to Rs 4600. That is rise of over 350 percent. What you think? deos that not show that money to poor inreased substantially?