Sunday, June 12, 2011

Double Digit Gains in Pakistan's Per Capita Income

Pakistan’s nominal per capita income rose 16.9 percent to $1,254 in 2010-11 from $1,073 in 2009-2010, according to the Economic Survey of Pakistan. Using the IMF's purchasing power parity exchange rate of Rs. 34 to a US dollar (versus official exchange rate of Rs. 85 to a US dollar), Pakistan's per capita income in terms of purchasing power parity works out to $3,135.00.

Per Capita PPP GDP

Although Pakistan's per capita GDP rose by only 0.7% in real terms, the much higher 16.9% nominal per capita income increase reflects a combination of the nation's double-digit inflation rate and the the rupee's stable exchange rate with the US dollar which has been losing ground to most major world currencies in 2010-2011.

Similar to Pakistan's nominal growth, at least a part of India's nominal growth in per capita gdp and income is also driven by rising domestic inflation of over 10% and appreciating Indian rupee (5.5% from 48.32 in 2009 to 45.65 in 2010) from strong hot money inflows from the Fed's quantitative easing in the United States and elsewhere. India's FDI has declined by a third from $34.6 billion in 2009 to $23.7 billion in 2010. Its current account deficit is being increasingly funded by significant short-term capital inflows (FII up 66% from $17.4 billion in 2009 to $29 billion in 2010) rather than more durable foreign direct investment (FDI). This alarming trend of declining FDI and surging FII in India has continued into 2010-2011.

The idea of PPP or purchasing power parity is quite simple. A US dollar can be exchanged today for about 85 Pakistani rupees. But with Rs 85 you can buy more goods and services in Pakistan than one US dollar can buy in the United States. So Pakistan's GDP expressed in dollars at current exchange rates is about 40% of what it is when adjusted for PPP. The current ratio for both Indian and Pakistani GDP conversion from nominal US dollars to PPP dollars is about 2.5, calculated as follows:

Country......Official Rate....Purchasing Power.....Ratio

India...........INR 45.................INR 18..........2.5

Pakistan.......PKR 85................PKR 34..........2.5

Looking at the increase in per capita income alone is quite misleading in judging the health of Pakistan's economy. Other indicators, such as real GDP growth and investments, show that the state of the economy is very poor. The nation's GDP grew only 2.4% in real terms in 2010-2011. Domestic investment dropped to a 40-year low of 13.4% of GDP, and foreign direct investment (FDI) declined by 29 percent to $1.232 billion during July-April 2010-11 from $1.725 million in the same period a year earlier.

In addition to improved security environment, Pakistan has an urgent need for serious economic reform, greater social justice and better governance. Unless the PPP government acts to improve this situation, no amount of foreign aid, external loans and other help will suffice. The first step in the process is for the ruling elite to lead by example by paying their fair share of taxes and adopting less extravagant personal lifestyles to get Pakistan's fiscal house in order.

Related Links:

Haq's Musings

Incompetence Worse Than Corruption in Pakistan

Comparing US and Pakistani Tax Evasion

Pakistan's Economic Performance 2008-2010

Brief History of Pakistan's Economy 1947-2010

Daily Carnage in Pakistan

US Raid in Abbottabad

Economic Survey of Pakistan 2010-2011 Highlights

Pakistan's Rural Economy Showing Strength

Shaukat Tarin on Pakistan's Regressive Tax Policies

Economic Survey of Pakistan 2010-2011

Friday, June 3, 2011

Pakistan Pictorial

Here is Pakistan in Pictures, a slide show produced by and now running on PakAlumni Worldwide Social Network for Pakistani diaspora:

Find more photos like this on PakAlumni Worldwide: The Global Social Network

It covers the length and breadth of beautiful Pakistan from the shiny shores of Karachi in the southeast to the majestic heights of the Karakorams in the northwest.

Please join Pakalumni to share your favorite pictures of Pakistan.

Here's a video clip with more pictures of life in Pakistan:

Related Links:

Haq's Musings

Scaling K2: The Ultimate Challenge

Extreme Kayaking in Pakistan

Pakistan's Media Revolution

Along Grand Trunk Road in India and Pakistan

Pakistan's Urban Middle Class

Music Drives Coke Sales in Pakistan

Life Goes On in Pakistan

Karachi Fashion Week

Is Pakistan Too Big to Fail?

Karachi Fashion Week Goes Bolder

More Pictures From Karachi Fashion Week 2009

Pakistan's Foreign Visitors Pleasantly Surprised

Start-ups Drive a Boom in Pakistan

Pakistan Conducting Research in Antarctica

Pakistan's Multi-billion Dollar IT Industry

Pakistan's Telecom Boom

ITU Internet Data

Eleven Days in Karachi

Pakistani Entrepreneurs in Silicon Valley

Musharraf's Economic Legacy

Infrastructure and Real Estate Development in Pakistan

Pakistan's International Rankings

Assessing Pakistan Army Capabilities

Pakistan is not Falling

Jinnah's Pakistan Booms Amidst Doom and Gloom