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MACROECONOMICS

4/12/2020

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RUNNING HEAD: MACROECONOMICS

Introduction:

Macroeconomics is the mega domain of economy of a country that deals with the inflation rate

growth rate, national income, per capita income and unemployment rate in the country. All of

these concepts and economic systems are interconnected and interrelated. They are all connected

in a chain. The change in one segment of the economy will make some changes in other domains

of the economy as well, such as, the change in the plan of note issue or some amendments in the

monetary policy of the country will affect the rate of inflation in the country, the inflation rate is

connected with the unemployment rate in the country, the unemployment rate is connected with

the per capita income and this process of connectivity goes on and on. One cannot study the

economy by just studying a single element of the economy. Pakistan is a developing economy.

The economy of the country had seen many ups and downs by the past decades. The country

came into being on 14 August 1947. From the commencement of the country until today, it had

seen many trails that had damage the economic progress of the country. The country had seen

constant 3 wars with the neighbouring country India, Apart from that they became an ally of the

USA, in Afghan and USSR war. They then became the key participant in the War of terrorism.

These defensive acts and incidents had damaged the economy of the country. There are

constantly seeking forward for the loans and relief funds from the IMF and World Bank (Anwar

et al., 2017). In 2019, they had again applied for a loan from IMF to clear their balance of

payment, which was pending. Apart from these issues, the country had seen political instability

and lack of constant and proper leadership since the commencement of the country. There are

three main factors of the macroeconomics that help to determine the economic condition of the

country, there are the inflation rate, unemployment rate and growth rate of the country.

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RUNNING HEAD: MACROECONOMICS

Inflation rate in the country:

Inflation is the concept of economics, it deals with the constant increase in the prices level of the

products in the country. A country needs to raise the prices with the change of time, but the rapid

change in the country can damage the economy of the country. The inflation rate in the country

can be determined by the help of the flow of money with in the country. The process of note

issue also affects the inflation rate of the country (Ayyoub et al., 2011). There is a concept, that

is opposite of inflation, the process is known as deflation. By deflation, one means the constant

decline in the price value of the country, this is dangerous than the inflation in the country.

That’s why the policy-makers and the economist of the country should make such policy that can

maintain the flow of money in the country and control the inflation rate. Pakistan’s inflation rate

is 7.34% in 2019. It had raised by the year, as the inflation rate of the country was 3.93% in

2018. It had raised in 2019, that is the sign of economic instability in the country.

The unemployment rate in the country:

Unemployment is an economic as well as social problem of every country. In the term of

economics by unemployment means the total number of eligible people in the country that are

willing to do a job they are jobless or doing a job on the level lower than their qualification. This

concept is known as unemployment in the country. It is the situation when people wants to do a

job, they are capable to do a job, but there is constant unavailability of job in the country (Ahmed

et al., 2014). The unemployment rate of Pakistan had fallen slightly, it decreased from 3.04% to

3.02%. It was 3.04% in 2018. In 2019 it is 3.02% as per the economic survey of Pakistan. It is a

good sign, as the unemployment rate falls in a country, it helps to increase the per capita income

of the people in the country (Shabbir et al., 2019).

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RUNNING HEAD: MACROECONOMICS

The growth rate of Pakistan:

The growth rate increases in the rate of the gross domestic product of the country. It is a sign of

progress of a state. The country with lesser growth rate shows the economy of the country is not

progressing, but rather than progressing, it is moving slowly. This shows the economic instability

in the country. The higher the growth rate of the country the better the economy will be. It helps

to determine the level and speed on which the country is progressing and developing. It shows

how much increase has been made in the gross domestic product of the country. The growth rate

of Pakistan had fallen. The growth rate of the country in 2019 is 3.3%. whereas the growth rate

in 2018 was 5.8%. This is the negative sign for the economy, as it shows that the economic

progress of the country had slow down. It shows the link of the country with some economic

instability (Economic survey of Pakistan, 2019).

Comparison of the economy of Pakistan and the economy of UAE:

UAE is also a developing economy. It is the second most progressive and developed economy of

the Middle East. The country had made progress by all these passing years. Because of the global

economy and the recession, the country had seen some economic instability in 2017, some

companies had fallen on the shutdown condition. They are compelled to do downsizing and it

had raised the level of unemployment in the country. But, by 2018 to onward, the country is

making progress again. The economic statistics and ratios are getting better by each passing day.

The economy of UAE is better than the economy of Pakistan as more people are willing to invest

in UAE and because of the resources of oil and natural gas.

Some comparison of the key economic factor of both of the countries are given as:

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RUNNING HEAD: MACROECONOMICS

1. The growth rate of UAE is 2.3% in 2019 as per the data provided by the central bank of

Dubai. Whereas the growth rate of Pakistan had declined in 2019, but it is still better than the

growth rate of the UAE, the growth rate of Pakistan is 3.3%.

2. The unemployment rate of the UAE is 2.64% in 2019, whereas the unemployment rate in

Pakistan is higher than that of the UAE. The unemployment rate in Pakistan is 3.02% by 2019.

3. The inflation rate in the UAE is -1.5% in 2019. The rate was 3.07% in 2018, whereas, the

inflation rate in Pakistan has increase and it is 7.34% by 2019. The inflation rate of Pakistan is

disastrous as it is really bad for the economic growth of the country, whereas the economy of

UAE is facing the trend of deflation, that is also not favourable for the state (Economic survey of

UAE, 2019).

References:

Ahmed, Rizwan & Aqil, Muhammad & Qureshi, Munawar & Qadeer, Seemab. (2014).

Determinants of Unemployment in Pakistan.. International Journal of Physical and Social

Sciences. 4. 676-682.

Anwar, Sofia & Abbas, Qaiser & Ashfaq, Muhammad. (2017). Introduction to the Economy of

Pakistan. Retried from:

https://www.researchgate.net/publication/321037817_Introduction_to_the_Economy_of_Pakista

Ayyoub, Muhammad & Chaudhry, Imran & Farooq, Fatima. (2011). Does Inflation Affect

Economic Growth? The case of Pakistan. Retried from:

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RUNNING HEAD: MACROECONOMICS

https://www.researchgate.net/publication/263729192_Does_Inflation_Affect_Economic_Growth

_The_case_of_Pakistan

Economic survey of Pakistan (2019). Economic survey of Pakistan 2018-19. Finance Division

Government of Pakistan . Retrieved from

http://finance.gov.pk/survey/chapters_19/Economic_Survey_2018_19.pdf

Economic survey of UAE (2019). Economic survey of UAE 2018-19. Finance Division

Government of UAE . Retrieved from

http://www.finance.gov.pk/survey/chapters_19/Economic_Survey_2018_19.pdf

Shabbir, Malik & Zeb, Aniqa. (2019). Impact of Economic Stability on Male Unemployment: A

case of Pakistan. Retried from:

https://www.researchgate.net/publication/333506935_Impact_of_Economic_Stability_on_Male_

Unemployment_A_case_of_Pakistan

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