Thursday, September 29, 2016

ADB Raises Pakistan GDP Forecast Amid Modi's War Talk

The Asian Development Bank (ADB) has raised Pakistan's economic growth forecast for fiscal year 2017 (from July 2016 to June 2017) from 4.8% to 5.2%. The Bank also sees brighter outlook for the the entire South Asian region. However, the prospects of even a limited India-Pakistan war could derail the economies of the entire South Asia region. I hope that sanity will prevail in New Delhi to tone down its war rhetoric, abstain from escalation and maintain the current economic momentum.



ADB Forecast: 

"...assuming further improvement in energy supply and security, and likely recovery in cotton and other agriculture-the growth forecast (for Pakistan) for FY2017 is revised up to 5.2%", says the Asian Development Outlook 2016 Update released September 27, 2016.

The ADO which is launched annually in March and updated in September provides a comprehensive analysis of macroeconomic issues in developing Asia.

The ADB report says that "growth in Pakistan will outperform the ADO 2016 projection for 2017".  Here's an excerpt  from the ADB report:

"In Bangladesh and Pakistan, estimated growth in the 2016 fiscal year, to 30 June, exceeded the forecasts because robust performance in manufacturing and services more than compensated for unexpected weakness in agriculture. Increased consumption and public investment contributed to the better performance in Bangladesh in 2016. A slower growth forecast for 2017 is retained as agriculture growth is expected to moderate. Growth in Pakistan will outperform the ADO 2016 projection for 2017 on improvements in energy supply, higher infrastructure investment in an economic corridor project, and a better security environment. Improved growth in these two large economies contrasts with Nepal, where the growth estimate for the 2016 fiscal year, which ended on 15 July, is below the forecast following disruption to supply and trade, delayed reconstruction of earthquake damage, and a poor monsoon. The economy is expected to recover in 2017 as forecast in ADO 2016 on markedly accelerated reconstruction spending and a good monsoon able to lift agricultural output."

Impact of US Interest Rate Hikes: 

On the impact of possible interest rate hikes by US Federal Reserve on national debt situation in South Asia, the ADB report says

"Interest rates pose less risk to India and Pakistan, where public debt is held mostly by domestic investors. However, where a significant share of such debt is short term, as in Pakistan, rollover risks are high and debt dynamics remain vulnerable to shocks. For all these economies, staying on course with fiscal consolidation through sound debt management and the progressive expansion of the tax base will help provide the fiscal resources and resilience needed to cope with future domestic or external shocks."

Macroeconomic Indicators: 

ADO 2016 Update says that the planned reduction in Pakistan's fiscal year 2017 budget deficit would enhance funding for private sector credit and better enable it to support rising domestic demand. The federal government budget for FY2017 projects further reduction in the deficit to 3.8% of GDP achieved through new revenue measures and streamlining current expenditure.

 Tax revenues are projected to increase by half a percentage point, raising the ratio of tax to GDP to 12.8% by eliminating more tax concessions and exemptions, expanding the withholding system as part of administrative reform to widen the tax base, and raising some excise taxes and customs duties, the report added.

The report says that Pakistan's current account deficit is expected to widen in FY2017 to about $5 billion, or 1.6 % of GDP, which is higher than forecast in March. The revision reflects rising global oil prices, declining exports and continued expansion in imports stemming from faster economic growth.

Industrial Indicators:

Pakistan's fiscal year 2015-16 saw production of motorcycles soar to a new high of over 2 million units. This represents a 16.5% surge from last year.  At the same time, passenger cars and light trucks sales rose to over 200,000 in fiscal 2016, a 20% jump over the same period last year.



Motorcycle Sales:

Rising motorcycle sales in Asia's developing nations like Pakistan are seen as a barometer of expanding middle class. It is, in part, attributed to rising incomes and availability of bank financing at historic low interest rates in the country.

As many as 2,071,123 motorcycles were manufactured during July-June (2015-16) compared to 1,777,251 units during July-June (2014-15), according to the latest data released by Pakistan Bureau of Statistics (PBS) and reported by Pakistani media.

Car Sales:

In addition to the double digit increase in motorcycle sales, Pakistan also experienced 20% jump in sales of passengers cars, light commercial vehicles (LCVs), vans and jeeps. The total sales of local vehicles increased by 21% to 216,568 as compared to 179,953 units sold in FY15, according to industry data.

Auto Parts Industry:

Rising auto and motorcycle sales are helping boost Pakistan's auto parts industry as well. “We are getting orders and the pace is increasing,” said Sultan and Kamil International CEO Faisal Mahmood speaking to Pakistani media on the sidelines of the 12th Pakistan Auto Show 2016 held at the Lahore International Expo Centre. Mahmood’s company makes more than 350 automotive parts and exports to all major automobile markets in the world.

Other Growth Industries:

Among other industries seeing significant growth are pharmaceuticals (6.54%), cement (17.01%), chemicals (8.13%), non metallic mineral products (10.02%), fertilizers (13.81%), leather products (7.76%) and rubber products (7.16%), according to media reports.

Summary:

Pakistan's economic recovery is in full swing with double digit growth in multiple industries, including auto, pharma, chemicals, cement, fertilizers, minerals, etc.  It is expected to pick up steam over the next several years with new investments on the back of China-Pakistan Economic Corridor related projects. Prospects of even a limited war in South Asia could derail the economies of the entire region. I hope that sanity will prevail in New Delhi to abstain from escalation and maintain the current economic momentum.


Related Links:

Haq's Musings

Is Pakistan Ready For War With India?

Growing Middle Class in Pakistan

Rising Energy Consumption

China-Pakistan Economic Corridor

Pakistan's Thar Desert Sees Development Boom



Sunday, September 25, 2016

Bollywood Needs Pakistan Market to Grow Business

Amid the Hindu Nationalists calls for sending Pakistani actors home, what is being overlooked is the fact that Bollywood needs Pakistan more than Pakistan needs Bollywood.  Why? Let me explain.

Pakistan is Bollywood's second biggest foreign market. Last year, Pakistan's box office receipts jumped by 28% while India's domestic box office collection fell 6.7%.

Decline in Bollywood's revenue at home is forcing the Indian movie industry to look to Pakistan for growth. Part of the Indian strategy is to feature Pakistani actors and artists in its productions to increase Bollywood's appeal to Pakistan's growing moviegoers market.

The money earned by Pakistani actors working in Bollywood is minuscule compared to the business Bollywood films are doing in the rapidly growing Pakistan market.

Pakistani Actors in Bollywood: Fawad Khan,  Mahira Khan, Mawra Hocane


Bollywood ticket sales fell by 6.7% to INR 2,568 crore ($385m) from 2014’s total of  INR 2,754 crore (US$413), according to figures published by India's Business Standard. Alarmed by declining sales, Disney Studios have decided to pull out of India.

After suffering huge losses at the domestic box office, the most recent one being Ashutosh Gowariker's Mohenjo Daro, Disney India - the company formed after Disney acquired controlling stake in UTV - has pulled the plug on all things Bollywood. Instead, Disney will only focus on its Hollywood films distribution, licensing and merchandising business in India, according to India Today.

On the other hand, Pakistani cinema, though small, is growing very rapidly with the explosive growth of multiplex theater screens. Pakistan's "The News Sunday" estimates that box office receipts in the country jumped 28 per cent in 2015 as compared to 2014 and this figure is only expected to grow in coming years. On Eid ul Azha this year, the top 3 highest-grossing films were all produced in Pakistan, according to EasyTickets.pk.

Source: EasyTickets.pk

Here's how Indian media and entertainment analyst Akar Patel describes Bollywood's business opportunity in Pakistan:

"In Pakistan, there is a big market for Indian movies in their multiplexes. For decades this revenue was lost to Bollywood because the movies were pirated. Under former president Pervez Musharraf, the official screening of movies was allowed, benefiting both nations. Today all Bollywood movies are shown there. Unfortunately, the current state of ties between the two countries has been allowed to deteriorate so much that we should not be surprised if Musharraf's wise decision is reversed."

It is a win-win arrangement with Pakistani artists working with their Indian counterparts in Indian movies and increasing Bollywood revenue from Pakistan market.

If the anti-Pakistan rhetoric and the attacks on Pakistani artists in Mumbai continue, it is very likely that Pakistan will respond by banning the showing of Indian films in a rapidly expanding market market for Bollywood entertainment. In addition to increasing estrangement between the two neighbors, stopping cooperation and collaboration will be a significant blow for the entertainment industries in both India and Pakistan.

Related Links:

Haq's Musings

Peepli Live Destroys Indian Myths

Bollywood-Hollywood Combos

Indian Bollywood Seeks Cultural Dominance

US Mortgage Fraud Funded Bollywood Movie

Coke Studio: Music Drives Coke Sales in Pakistan

Friday, September 23, 2016

Does Trump Know India Sends More Illegals Than Mexico to US?

Does Donald Trump, the anti-immigration Republican presidential candidate, know that India is now the biggest source of illegal immigrants entering the United States?



US visa is the most sought after visa in India. Those who get it celebrate with billboards. Those who don't find human smugglers to smuggle them into the United States. The preferred routes for illegal entry from India are through the Caribbean and Central America.

Many surveys conducted in India over the years indicate that millions of Indians want to leave India to settle abroad. A quick Google search for "Escape from India" produces nearly 100 million results.  Many Indians cite lack of opportunitypoverty and various forms of discrimination as the reasons for wanting to leave India.


The number of unauthorized immigrants born in India grew by about 130,000 from 2009 to 2014, to an estimated 500,000. Many unauthorized immigrants from these nations arrived with legal status and overstayed their visas, according to Department of Homeland Security statistics. Homeland Security Secretary Jeh Johnson said recently that his agency is “doubling down” on preventing immigrants from Africa, the Middle East and other parts of the world from crossing illegally at the southwest border, according to the Pew Research Report.

From 2009 to 2014, Pew estimates that the number of undocumented Indian immigrants in the U.S. exploded by 43% to a total of around 500,000. During the same period, the number of unauthorized Mexicans fell 8% to 5.85 million, according to a report in the Wall Street Journal.

Source: Wall Street Journal

Looking at the total arrivals including legal and illegal immigrants, India and China are each sending more people to the United States in recent years than any other country.



In 2014 about 136,000 people came to the U.S. from India, about 128,000 from China and about 123,000 from Mexico, census figures show. As recently as 2005, Mexico sent more than 10 times as many people to the U.S. as China, and more than six times as many as India, according to the WSJ story.

Will Donald Trump and his fellow anti-immigration campaigners take note of the changing picture of illegal immigration into the United States?  Will they stop bashing Mexicans and Muslims?

Related Links:

Haq's Musings

Story of New York's Little Pakistan

Illegal Immigration From India to US

How to Escape From India?

India: Home to World's Largest Population of Poor, Hungry and Illiterates

India's Share of World's Poor Jumps to 33%

Caste Apartheid in India

Untouchables: My Family's Triumphant Escape from India's Caste System

Female Genocide Unfolding in India

Saturday, September 17, 2016

Pakistan Beats BRICs in Highly Cited Research

Pakistan has emerged as the country with the highest percentage of Highly Cited Papers compared with the BRIC countries (Brazil, Russia, India and China) in the last 10 years, according to Thomson Reuters. Pakistan has doe so despite the fact that its "R&D environment faced substantial economic challenges".

Source: Thomson Reuters
In a report titled "Pakistan: Another BRIC in the Wall", author Lulian Herciu says that Pakistan’s scientific productivity has quadrupled, from approximately 2,000 articles per year in 2006 to more than 9,000 articles in 2015. During this time, the number of Highly Cited Papers featuring Pakistan-based authors increased tenfold, from 9 articles in 2006 to 98 in 2015.

Source: Thomson Reuters
The author asserts that his report provides comparisons between Pakistan and BRIC nations taking a look at productivity and leveraging contextual indicators. His analysis points to the fact that Pakistan can be benchmarked with emerging and dynamic countries such as those in the BRIC (Brazil, Russia, India and China) group.

The Thomson Reuters report has found that, in 2012, "Pakistan's normalized Citation Impact was higher than that of all of the BRIC nations".

CERN Membership:

In 2014, Pakistan became the first Asian country and only the third in the world after Turkey and Serbia to be honored with CERN's associate membership. The status of associate member is a step before full membership. As an associate member, Pakistan  is entitled to attend open and restricted sessions of the organization.

College and University Enrollment:

There are over 3 million students enrolled in grades 13 through 16 in Pakistan's 1,086 degree colleges and 161 universities, according to Pakistan Higher Education Commission report for 2013-14.  The 3 million enrollment is 15% of the 20 million Pakistanis in the eligible age group of 18-24 years.  In addition, there are over 255,000 Pakistanis enrolled in vocational training schools, according to Technical Education and Vocational Training Authority (TEVTA).

Graduation Day at NED Engineering University For 1300 Graduates in 2013
Pakistani universities have been producing over half a million graduates, including over 10,000 IT graduates, every year since 2010, according to HEC data. The number of university graduates in Pakistan increased from 380,773 in 2005-6 to 493,993 in 2008-09. This figure is growing with rising enrollment and contributing to Pakistan's growing human capital.

Source: UNESCO's Global Education Digest 2009






Higher education in Pakistan has come a long way since its independence in 1947 when there was only one university, the University of Punjab. By 1997, the number of universities had risen to 35, of which 3 were federally administered and 22 were under the provincial governments, with a combined enrollment of 71,819 students. A big spending boost by President Pervez Musharraf helped establish 51 new universities and awarding institutions during 2002-2008. This helped triple university enrollment from 135,000 in 2003 to about 400,000 in 2008, according to Dr. Ata ur Rehman who led the charge for expanding higher education during Musharraf years. There are 161 universities with 1.5 million students enrolled in Pakistan as of 2014.

R&D Investment: 

Rise of research and publications at Pakistani universities began during Musharraf years when the annual budget for higher education increased from only Rs 500 million in 2000 to Rs 28 billion in 2008, to lay the foundations of the development of a strong knowledge economy, according to former education minister Dr. Ata ur Rehman. Student enrollment in universities increased from 270,000 to 900,000 and the number of universities and degree awarding institutions increased from 57 in 2000 to 137 by 2008. Government R&D spending jumped seven-fold as percentage of GDP from 0.1% of GDP in 1999 to 0.7% of GDP in 2007. It has since declined as percentage of GDP.

Summary:

Pakistani scientists and researchers are continuing to produced highly cited research in spite of serious economic and security challenges. Enrollment in higher education is rising and giving a boost to academic research. With better policy focus and more investment in higher education, Pakistan  can make an even greater impact with its young demographics.

Related Links:

Haq's Musings

Pakistan Becomes CERN Member

Pakistani Scientists at CERN

Rising College Enrollment in Pakistan

10 Pakistani Universities Among Asia's Top 300

Genomics and Biotech Research in Pakistan

Human Capital Growth in Pakistan

Educational Attainment in Pakistan

Pakistan Human Development in Musharraf Years

Robotics Growth in Pakistan 

Thursday, September 15, 2016

Pakistan's Motorcycle Sales Soar With Expanding Middle Class

Pakistan's fiscal year 2015-16 saw production of motorcycles soar to a new high of over 2 million units. This represents a 16.5% surge from last year.  At the same time, passenger cars and light trucks sales rose to over 200,000 in fiscal 2016, a 20% jump over the same period last year.



Motorcycle Sales:

Rising motorcycle sales in Asia's developing nations like Pakistan are seen as a barometer of expanding middle class. It is, in part, attributed to rising incomes and availability of bank financing at historic low interest rates in the country.

As many as 2,071,123 motorcycles were manufactured during July-June (2015-16) compared to 1,777,251 units during July-June (2014-15), according to the latest data released by Pakistan Bureau of Statistics (PBS) and reported by Pakistani media.

Car Sales:

In addition to the double digit increase in motorcycle sales, Pakistan also experienced 20% jump in sales of passengers cars, light commercial vehicles (LCVs), vans and jeeps. The total sales of local vehicles increased by 21% to 216,568 as compared to 179,953 units sold in FY15, according to industry data.

Auto Parts Industry:

Rising auto and motorcycle sales are helping boost Pakistan's auto parts industry as well. “We are getting orders and the pace is increasing,” said Sultan and Kamil International CEO Faisal Mahmood speaking to Pakistani media on the sidelines of the 12th Pakistan Auto Show 2016 held at the Lahore International Expo Centre. Mahmood’s company makes more than 350 automotive parts and exports to all major automobile markets in the world.

Other Growth Industries:

Among other industries seeing significant growth are pharmaceuticals (6.54%), cement (17.01%), chemicals (8.13%), non metallic mineral products (10.02%), fertilizers (13.81%), leather products (7.76%) and rubber products (7.16%), according to media reports.

Summary:

Pakistan's economic recovery is in full swing with double digit growth in multiple industries, including auto, pharma, chemicals, cement, fertilizers, minerals, etc.  It is expected to pick up steam over the next several years with new investments on the back of China-Pakistan Economic Corridor related projects.


Related Links:

Haq's Musings

Growing Middle Class in Pakistan

Rising Energy Consumption

China-Pakistan Economic Corridor

Pakistan's Thar Desert Sees Development Boom

Gwadar vs Chabahar Ports