HAMDARD INSTITUTE OF MANAGEMENT

SCIENCES

ASSIGNMENT

Name: Hafiz Muhammad Shahid

CMS ID: 515-2017
Submitted to: Sir Nasar-ul-Eman
 MACROECONOMIC PROBLEMS OF PAKISTAN

Pakistan today, confronts multiple challenges which vary in intensity. Some of the
challenges appear to be multi-dimensional and complex in nature which certainly
will take many years to overcome. Interestingly, a few of the problems and
challenges have been self-inflicted by the powerhouses that have caused a
widespread socio-economic damage to this country. This way, the poor economy
of Pakistan remains the chieftain among the challenges since the country’s birth.
The weak and fragile structure and the picture of the economy of Pakistan are what
inevitably produce other inter-linked social challenges, such as poverty and
corruption.

One gets to know that ever-rising inflation, increasing unemployment, shrinking

GDP and diminishing exports level are the major obstacles which restrict the
ability of Pakistan to have a well-developed and flourishing economy. According
to the Economic Survey of Pakistan 2016-17, the inflation rate in Pakistan grew to
5.02% from 4.78%; GDP growth rate went up to 4.71% from 4.04%;
unemployment rate declined to 5.9% from 6%; interest rate is 5.75% which
remains the same. Although the economic indicators are, by the large, not
appreciable but a slight increase in GDP seems to be the positive development.
Below mentioned are few major economic problems of Pakistan.
 INFLATION

Inflation rate in Pakistan is very high and it is one of the most adverse problems of Pakistan these
days. The average inflation rate of Pakistan is 8.03. . In January of 2014 the inflation rate was
7.90. The devaluation of Rupee is creating problems for our count.

The imports have increased in a significant manner and the exports are falling daily this major
reason why the country like Pakistan is unable to keep the inflation rate down. Core consumer
prices in Pakistan increased 5.20 percent in November of 2017 over the same month in the
previous year. Core Inflation Rate in Pakistan averaged 7.54 percent from 2010 until 2017,
reaching an all-time high of 11.40 percent in June of 2012 and a record low of 3.40 percent in
September of 2015.
 UNEMPLOYMENT

Unemployment Rate in Pakistan remained unchanged at 5.90 percent in 2016 from 5.90 percent
in 2015. Unemployment Rate in Pakistan averaged 5.47 percent from 1985 until 2016, reaching
an all time high of 7.80 percent in 2002 and a record low of 3.10 percent in 1988

The problem of unemployment has all along been existed in Pakistan since its inception. It remained an
important issue center in the country therefore; Pakistan's new generation suffers from this problem a lot.
Causes behind the unemployment of youth are the following;

 There are no vacancies for youth in the market as it is already saturated.

 Education system is not fully equipped to prepare the youth to meet the market demand.

 In budget the fiscal deficit has detracted the ratio of the employment.

 There is lack of industrialization.

 Favoritism in politics

 Because of the population explosion there is unemployment in Pakistan youth.

 Weak, defective and inefficient economic plans and management is also one of the reasons for
caused unemployment in Pakistani youth
 TRADE DEFICIT

Pakistan recorded a trade deficit of 307979 PKR Million in November of 2017. Balance of Trade
in Pakistan averaged -33527.24 PKR Million from 1957 until 2017, reaching an all-time high of
6457 PKR Million in June of 2003 and a record low of -362902 PKR Million in May of 2017.

Pakistan’s trade deficit widened to $12.1 billion in just four months due to increasing imports of
the country putting further pressure on the foreign exchange reserves.

The country’s trade deficit had recorded $12.1 billion during first four months (July to October)
of the ongoing financial year as against $9.2 billion of the corresponding period of the last year
showing an increase of 31.24 percent. Pakistan’s exports had registered at $7.1 billion during
July-October of 2017-18 as compared to $6.4 billion of the corresponding period of the last year
showing a growth of 10.04 percent. Meanwhile, the imports had also shown an increase of 22.55
percent and recorded at $19.2 billion during first four months of the current financial year as
against $15.7 billion of the same period last year, according to Pakistan Bureau of Statistics
(PBS).

PAKISTAN TOTAL EXTERNAL DEBT

External Debt in Pakistan increased to 85052 USD Million in the third quarter of 2017 from
82981 USD Million in the second quarter of 2017. External Debt in Pakistan averaged 52551.19
USD Million from 2002 until 2017, reaching an all-time high of 85052 USD Million in the third
quarter of 2017 and a record low of 33172 USD Million in the third quarter of 2004.

GDP Annual Growth Rate in Pakistan is expected to be 5.10 percent by the end of this quarter,
according to Trading Economics global macro models and analysts’ expectations. In the long-
term, the Pakistan GDP Annual Growth Rate is projected to trend around 5.50 percent in 2020,
according to our econometric models.
 POLLUTION

There is too much pollution in poor countries. On the one side huge existing
population is not provided basic facilities of life, like sanitation, clean water,
infrastructure etc. but on the other side due to rapid population growth,
industrialization and transportation air, water and earth pollution is increasing.
Industries are causing pollution because of non-installation of treatment plants.
Number of continuous air pollution monitoring stations is only 7 in Pakistan.
Pakistan is at number 29th at the chart of the most polluted nations and at number
6th in Asian countries.
 CONCLUSION

To conclude, Pakistan has, undoubtedly, good economic prospects. For past four
years, Pakistan has witnessed 81% rise in tax revenue which is, seemingly, a big
plus. This year’s budget showed a 5.3% growth in GDP which is highest and the
first time in over a decade. CPEC — a multi-billion dollar project — has the
potential to turn Pakistan and make it an Asian tiger. The economic prosperity,
reducing a gap between ‘haves and have-nots’, offering millions of jobs to the
people of this country are likely to be the resultants of this project.

Finally, the milestones such as Benazir Income Support Program (BISP) — a

social safety net program — should be expanded and promoted to eliminate
poverty and unemployment; its beneficiary’s numbers reached to approx. 6
million. Surely, Pakistan needs to move along with structural reforms by locating
root causes of the problems and challenges, its economy faces