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Article

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Pakistan’s economy remained sluggish in 2011 due to domestic political instability, energy shortages, deteriorating Pakistan-U.S. relations, global climate change, and internal security concerns.

The latest estimates show that for fourth year in succession GDP growth in 2011-12 will again fall below its long term growth rate. With population rising around 2 percent per capita income will increase by around 2 percent. This outcome is in sharp contrast to the 2002-07 period when per capita incomes were recording around 5 percent growth annually. Investment rate dropped to 13.4 percent ---its lowest level in last four decades. Fiscal imbalances arising out of subsidies to loss making public enterprises, low tax mobilization efforts, inefficiency and waste in public expenditure resulted in excessive borrowing from the banking system. The government decided to terminate its ongoing arrangements with the IMF the flow of external resources for budgetary support from multilateral development banks was interrupted. The shortfalls in financing were made up by additional borrowing from domestic banking system.

Publication Source

East Asia Forum Quarterly

Publication Date

1-2012

Pages

1-3

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