Monitoring Country Progress in Pakistan

Transcription

1 Monitoring Country Progress in Pakistan Program Office OAPA & USAID/Pakistan U.S. Agency for International Development Pakistan Institute for Development Economics September, 21 st, 211

2 Economic Reforms Figure 1 Economic Reform vs. Democratic Reforms 5. Pakistan and its neighbors are among the slowest reformers globally 4. Eastern Europe & Eurasia Israel Thailand 3. Latin America & Caribbean Kyrgyz Republic Kazakhstan Middle East & North Africa Mongolia 2. Laos Uzbekistan Turkmenistan Afghanistan China Vietnam Cambodia Tajikistan Pakistan Nepal Sri Lanka Indonesia Philippines East Timor Bangladesh Democratic Reforms egional averages are estimates. World Bank, World Development Indicators (April 211); Doing Business in 211 (November 21); Freedom House, Freedom in the World (211 nd earlier editions); Freedom in the Press (21); and World Bank Institute, Governance Matters Indicators (21). India

3 Rank of 1 to 183 Figure 2 Doing Business in Pakistan Pakistan has weak tax policy and scores very poorly on reforms that increase confidence in foreign & domestic investment as estimated by the World Bank Protecting Investors Getting Credit World Bank, Doing Business in 211 (November 21). Closing a Business Trading Across Borders Starting a Business Dealing with Construction Permits Registering Property Paying Taxes Enforcing Contracts

4 Economic Performance Figure 3 5. Economic Performance vs. Human Capital 4. Cambodia Vietnam Mongolia China Turkmenistan Thailand Uzbekistan Kazakhstan 3. Afghanistan India Bangladesh Laos Middle East & North Africa Latin America & Caribbean Tajikistan Indonesia Philippines Kyrgyz Republic Sri Lanka Eastern Europe & Eurasia Israel Pakistan Nepal 2. Sub Saharan Africa East Timor Human Capital Regional averages are estimates. World Bank, World Development Indicators (April 211); UNICEF, Save the World s Children (21) and UNDP, Human Development Report.

5 U.S. Dollars Billion US$ Billion Figure 4 Size of Pakistan s Economy GDP IMF, World Economic Outlook: October Update (October 21)

6 GDP % Change Figure Pakistan Economic Growth From 25 to 21, Pakistan averaged 4.9% GDP growth, proving its resilience in the face of multiple adverse events IMF, World Economic Outlook (April 211) and Economist Intelligence Unit, Pakistan Country Report (August 211).

7 Figures 6-7 Population in Pakistan (in millions) Pakistan is currently the 6 th most populous country Million Million Male Female Male Female The population is estimated to nearly double in 5 years US Census, International Database (January 211).

8 Percent Change Figure Inflation in Pakistan Inflation is driven by surging government budgetary borrowing. Government borrowing from banks in the first seven months of the financial year increased 62% from the previous year surge in global petrol prices 15 1 Earthquake Flood 5 Drought Inflation rose at double digit rates for over 35 consecutive months (with one exception) IMF, World Economic Outlook (April 211) and Economist Intelligence Unit, Pakistan Country Report (August 211).

9 U.S. Dollars Billion Figure 9 Top Remittances Receiving Developing Countries 5 45 Remittances in Pakistan are estimated at 5.2% of GDP World Bank, World Development Indicators (April 211); State Bank of Pakistan, FY 21 Annual Report-Statistical Supplement (21). *State Bank of Pakistan reports remittances at $8.9 Billion US for FY 21.

10 Percent of GDP World Bank, World Development Indicators (April 211). Research in Pakistan shows that remittances are predominantly used to meet daily expenses such as food, clothing and health care; however, funds are also spent on building or improving housing, buying land, cattle or durable consumer goods, the repayment of loans for migration and to fund pilgrimages to Mecca (Suleri and Savage, Remittances in Crisis: A Case Study from Pakistan (November 26)). Figure 1 8 Remittances in Pakistan from Flood 5 4 Earthquake Drought While historically importantly to the economy, remittances in recent years have soared; more than quadrupling since 2 bolstering foreign exchange reserves and inflation Q1

11 Net Migration Percent of GDP Figure 11 Remittances & Migration in Pakistan 1,, 6 8, Remittances (right axis) 6, 5 4, 4 2, 3-2, -4, Migration (left axis) 2-6, 1-8, -1,, World Bank, World Development Indicators (April 211).

12 Percent of GDP Figure Growth in Remittances & Agriculture GDP in Pakistan Remittances (left axis) A cross-country IMF study argues that agricultural GDP is a good indicator of economic hardship, which makes a lot of sense for Pakistan (one-fifth of GDP). The study concludes, when agricultural GDP in these countries falls, workers remittances tend to increase. Agriculture GDP Growth (right axis) World Bank, World Development Indicators (April 211).

13 Percent of GDP Figure Tax Revenue in 29 Pakistan is one of the top 2 worst tax revenue generating countries in the world. Only 2 million or 1.1 percent of the Pakistani population pay income tax Heritage Foundation, Index of Economic Freedom 211 (January 211).

14 Percent of GDP Figure Tax Revenue in Pakistan marks the fall of Benazir Bhutto & Nawaz Sharif s civilian government Pakistan s low revenue collection is a burden on the already significant budget deficit and a threat to devolution of authority to the line ministries World Bank, World Development Indicators (April 211). Note that taxes in absolute terms are increasing.

15 % of GDP Figures 15 8 Exports Earnings in Thailand South Korea China Indonesia India Haiti Pakistan Ethopia Ethiopia In July-April 21 Pakistan s Exports only accounted for 9% of GDP. World Bank, World Development Indicators (December 2 th, 21) and Pakistan Federal Bureau of Statistics.

16 Percent of GDP Figure Current Account Balance in Pakistan The IMF states that a current account deficit of greater than (3%) of GDP for three or more years is a cause for concern. Pakistan has run a current account deficit of greater than 3% for the last 5 years The widening trade gap could draw down foreign exchange reserves and dampen GDP growth in the medium term World Bank, World Development Indicators (April 211) and IMF, World Economic Outlook October (April 211).

17 U.S. Dollars Billion Figure Foreign Direct Investment in Pakistan The global recession combined with a worsening business environment discourages FDI. Surge resulting from investment in telecom & privatization of banks World Bank, World Development Indicators, (April 211)

18 US$ Million Figure 18 Subsidies in Pakistan /9 29/ IMF, Pakistan (January 211) Power Wheat Oil Food (non wheat)

19 PRs/khw Asia Development Bank, Integrated Energy Sector Recovery Report & Plan (October 21). Figure 19 Electricity Subsidies 9 8 The burden of energy subsidies has tripled in the last 3 years to over 2.5 rupees per kwh as measured by the ADB. Cost of Service 7 6 Retail Price 5 4 Energy subsidies account for 1.4% of GDP. 3 24/5 25/6 26/7 27/8 28/9 29/1

20 Technical & Distribution Losses as % of net system energy World Bank, World Development Indicators (April 211). Figure 2 Energy Losses /5 of energy produced in Pakistan is lost in technical and distribution. In addition, Pakistan experiences losses due to administrative loss (including theft) and circular debt

21 Thousands of GigaWatts Government of Pakistan, Ministry of Finance, Pakistan Economic Survey 29-1 (21). % change in energy supply Figure Energy Supply in Pakistan 9.3 Energy Supply % change (right axis) ADB estimates that the energy shortfall (including load shedding) is estimated to have reduced GDP growth by %

22 # of hours, per customer, per year Figure Load Shedding in Pakistan (hours each customer experiences electrical power outage) Losses in the industrial sectors are estimated at $2.5 billion per year because of load shedding, costing 4, jobs. In the past 3 years, NEPRA estimated that customers went from experiencing the equivalent of 2 weeks to 22 weeks a year with no power /6 26/7 27/8 28/9 National Electric Power Regulatory Authority, State of the Industry Report (29-1). This crisis is in part due to T&D losses, theft, and pricing policy that does not generate enough revenue to cover power generation costs (GoP 21).

23 Government of Pakistan, Ministry of Finance, Pakistan Economic Survey 29-1 (21). Estimates for agriculture consumption are as high as 9% of water resources with potentially 6% of which is wasted due to aging and poorly maintained infrastructure and irrigation management that is largely unresponsive to the needs of the bulk of the country s farmers. Figures Water Vulnerability in Pakistan Water Uses Domestic uses 8% 6 5 Water availability has fallen 8% in the last 5 years Water Availability Per Capita 4 Industry 23% M 3 3 Agriculture 69% Agricultural dependence on a sharply declining water supply will lead to crop competition over water and will exacerbate food insecurity

24 Millions of hectares Woodrow Wilson International Center for Scholars, Running on Empty, Pakistan s Water Crisis (29). Nearly 5% of the population was affected by food insecurity in 29, and is likely substantially higher after the 21 floods. Figure 25 Water Consumption of Major Crops in Pakistan 8 7 Pakistan is the 1 th -largest sugar producing nation but sugarcane is an extremely water-intensive crop Hectares (left axis) Water (right axis) Water m Water intensive crops driving food insecurity

25 Percent of GDP Figure 26 Composition of GDP over Decades in Pakistan % of total labor force Services Industry Agriculture % of total labor force, 15.7 million workers % of total labor force, 23.1 Millions workers World Bank, World Development Indicators (April 211). ADB, Key Indicators for Asia and the Pacific 21 Country Tables (21). Agriculture is constrained by insufficient investment over many years, inappropriate policies, and an impending water crisis.

26 % of Population US Census, International Database (August 211). 57% of the population is under Figure 27 Proportion of Population Under Three million people enter the labor market every year

27 Percent Figure 28 1 Labor Force Participation Rates 9 Men Women Punjab Sindh Balochistan KPK Brookings, Pakistan Index, Tracking Variables of Reconstruction & Security (December 8 th, 21) derived from the Government of KPK Finance Department (June 29).

28 Percent Figure 29 Poverty Rates in 26 (population living under 2$ a day) Pakistan s high poverty rates are partially driven by low literacy, poor access to basic health care services and a significant youth bulge. Sri Lanka Nepal Pakistan India Bangladesh World Bank, Sparing Lives, Better Reproductive Health for Poor Women in South Asia (March 29).

29 % of Population over age 15 Figure Adult Literacy in Pakistan s low literacy rate is accentuated by weak rural and female literacy. It is estimated that less than half of the rural (48%) and female population are literate (44%). 28 UNDP, Human Development Report (21).

30 % of Population over age 1 Figure Male Adult Literacy in Pakistan by Gender Female Pakistan Federal Bureau of Statistics, Pakistan Social and Living Standards Measurement Survey 28-9 (August 21).

31 Gross Enrollment Figure 32 1 Primary Age Student Not in School Pakistan s poor education attainment is intensified by low female enrollment. The survival rate of females to grade 5 was only 6% in UNESCO, Institute for Statistics (21).

32 Percent of Schools Government of Pakistan, Ministry of Finance, Pakistan Economic Survey 29-1 (21). Figure 33 Public School Facilities Total Urban Rural No Electricity No Latrines No Drinking Water

33 % of GDP Figure Public Health Expenditure in 29 UNICEF estimates that annual public healthcare only amounts to $4 per person World Bank, World Development Indicators (April 211). The Health Budget 26: The Policy Context estimates that 75% of health costs are financed out-of-pocket.

34 Deaths per 1, Live Births Figure Under 5 Mortality Nearly 1 in 1 children die before the age of Pakistan 5 Bangladesh Indonesia Philippines Pakistan is committed to reaching the MDG of an Under Five Mortality rate of 52 deaths per 1 by UNICEF, State of the World s Children 211 (211); World Bank, World Development Indicators (April 211).

35 Deaths per 1, Live Births Figure Maternal Mortality Ratio (reported 25-29) 1, Pakistan is committed to reaching the MDG of a Maternal Mortality ratio of 14 deaths by 215 UNICEF, State of the World s Children 21 (21).

36 Births per woman Figure 37 9 Total Fertility Rate 8 7 Afghanistan India Bangladesh Pakistan 3 Indonesia 2 Global Replacement Rate = Pakistan s fertility rate is not estimated to reach replacement rate until United Nation Population Division, World Population Projections 21 Revision (April 211).

37 Figures 38-4 Male Million Population in Pakistan (in millions) Female Male Million Female Demographic Indicators for Pakistan Population Midyear population (in thousands) Growth rate (percent) Fertility Total fertility rate (births per woman) Crude birth rate (per 1, population) Mortality Life expectancy at birth (years) Infant mortality rate (per 1, births) Under 5 mortality rate (per 1, births) Crude death rate (per 1, population) Migration Net migration rate (per 1, population) Net number of migrants (in thousands) Male Million Female US Census, International Database (April 211).