Economy Analysis

What is economy analysis

A systematic approach to determining the optimum use of scarce resources, involving
comparison of two or more alternatives in achieving a specific objective under the
given assumptions and constraints.
Economic
analysis
takes
into account the opportunity
costs of
resources employed and attempts to measure in monetary terms the private and social
costs and benefits of a project to the community or economy.

Pakistan Economy Analysis Profile 2013

Economy - overview
Decades of internal political disputes and low levels of foreign investment have led to
slow growth and underdevelopment in Pakistan. Agriculture accounts for more than
one-fifth of output and two-fifths of employment. Textiles account for most of Pakistan's
export earnings, and Pakistan's failure to expand a viable export base for other
manufactures has left the country vulnerable to shifts in world demand. Official
unemployment is under 6%, but this fails to capture the true picture, because much of
the economy is informal and underemployment remains high. Over the past few years,
low growth and high inflation, led by a spurt in food prices, have increased the amount
of poverty - the UN Human Development Report estimated poverty in 2011 at almost
50% of the population. Inflation has worsened the situation, climbing from 7.7% in 2007
to almost 12% for 2011, before declining to 10% in 2012. As a result of political and
economic instability, the Pakistani rupee has depreciated more than 40% since 2007.
The government agreed to an International Monetary Fund Standby Arrangement in
November 2008 in response to a balance of payments crisis. Although the economy has
stabilized since the crisis, it has failed to recover. Foreign investment has not returned,
due to investor concerns related to governance, energy, security, and a slow-down in
the global economy. Remittances from overseas workers, averaging about $1 billion a
month since March 2011, remain a bright spot for Pakistan. However, after a small
current account surplus in fiscal year 2011 (July 2010/June 2011), Pakistan's current
account turned to deficit in fiscal year 2012, spurred by higher prices for imported oil
and lower prices for exported cotton. Pakistan remains stuck in a low-income, lowgrowth trap, with growth averaging about 3% per year from 2008 to 2012. Pakistan must

address long standing issues related to government revenues and energy production in
order to spur the amount of economic growth that will be necessary to employ its
growing population.

GDP (purchasing power parity)

$514.6 billion (2012 est.)
$496.3 billion (2011 est.)
$481.7 billion (2010 est.)
note: data are in 2012 US dollars

GDP (official exchange rate)

$230.5 billion (2012 est.)

GDP - real growth rate

3.7% (2012 est.)
3% (2011 est.)
3.1% (2010 est.)

GDP - per capita (PPP)

$2,900 (2012 est.)
$2,800 (2011 est.)
$2,800 (2010 est.)
note: data are in 2012 US dollars

GDP - composition by sector

agriculture: 20.1%
industry: 25.5%
services: 54.4% (2012 est.)

Population below poverty line

22.3% (FY05/06 est.)

Labor force
60.36 million
note: extensive export of labor, mostly to the Middle East, and use of child labor (2012
est.)

Labor force - by occupation

agriculture: 45.1%
industry: 20.7%
services: 34.2% (2010 est.)

Unemployment rate
5.6% (2012 est.)
5.6% (2011 est.)
note: substantial underemployment exists

Unemployment, youth ages 15-24

total: 7.7%
male: 7%
female: 10.5% (2008)

Household income or consumption by percentage share

lowest 10%: 9.9%
highest 10%: 39.3% (FY07/08)

Distribution of family income - Gini index

30.6 (FY07/08)
41 (FY98/99)

Investment (gross fixed)

10.9% of GDP (2012 est.)

Budget
revenues: $29.51 billion
expenditures: $44.19 billion (2012 est.)

Taxes and other revenues

12.8% of GDP (2012 est.)

Budget surplus (+) or deficit (-)

-6.4% of GDP (2012 est.)

Public debt
50.4% of GDP (2012 est.)
60.1% of GDP (2011 est.)

Inflation rate (consumer prices)

11.3% (2012 est.)
11.9% (2011 est.)

Central bank discount rate

12% (31 January 2012 est.)
14% (31 December 2010 est.)

Commercial bank prime lending rate

12.2% (31 December 2012 est.)
14.12% (31 December 2011 est.)

Stock of narrow money

$60.68 billion (31 December 2012 est.)
$56.34 billion (31 December 2011 est.)

Stock of money
$NA (31 December 2008)
$52.76 billion (31 December 2007)

Stock of quasi money

$NA (31 December 2008)
$18.42 billion (31 December 2007)

Stock of broad money

$76.16 billion (31 December 2011 est.)
$71.36 billion (31 December 2010 est.)

Stock of domestic credit

$92.06 billion (31 December 2012 est.)
$86.19 billion (31 December 2011 est.)

Market value of publicly traded shares

$32.76 billion (31 December 2011)
$38.17 billion (31 December 2010)
$33.24 billion (31 December 2009)

Agriculture - products
cotton, wheat, rice, sugarcane, fruits, vegetables; milk, beef, mutton, eggs

Industries
textiles and apparel, food processing, pharmaceuticals, construction materials, paper
products, fertilizer, shrimp

Industrial production growth rate

3% (2011 est.)

Current Account Balance

-$4.632 billion (2012 est.)
$268 million (2011 est.)

Exports
$24.66 billion (2012 est.)
$26.3 billion (2011 est.)

Exports - commodities
textiles (garments, bed linen, cotton cloth, yarn), rice, leather goods, sports goods,
chemicals, manufactures, carpets and rugs

Exports - partners
US 15%, UAE 9.7%, Afghanistan 9.5%, China 9.2%, UK 5%, Germany 4.5% (2012 est.)

Imports
$40.82 billion (2012 est.)
$38.93 billion (2011 est.)

Imports - commodities
petroleum, petroleum products, machinery, plastics, transportation equipment, edible
oils, paper and paperboard, iron and steel, tea

Imports - partners
UAE 17.2%, China 15%, Saudi Arabia 11.2%, Kuwait 8.9%, Malaysia 5.4%, Japan 4.3%
(2012 est.)

Reserves of foreign exchange and gold

$13.5 billion (30 November 2012 est.)
$18.09 billion (31 December 2011 est.)

Debt - external
$55.98 billion (31 December 2012 est.)
$58.27 billion (31 December 2011 est.)

Stock of direct foreign investment - at home

$22.38 billion (31 December 2012 est.)
$21.88 billion (31 December 2011 est.)

Stock of direct foreign investment - abroad

$1.482 billion (31 December 2012 est.)
$1.432 billion (31 December 2011 est.)

Exchange rates
Pakistani rupees (PKR) per US dollar 95.1 (2012 est.)
86.3434 (2011 est.)
85.194 (2010 est.)
81.71 (2009)
70.64 (2008)

Fiscal year
1 July - 30 June

Market analysis
A market analysis studies the attractiveness and the dynamics of a
special market within a special industry. It is part of the industry analysis and this in turn
of the global environmental analysis. Through all of these analyses the opportunities,
strengths, weaknesses and threats of a company can be identified. Finally, with the help
of a SWOT analysis, adequate business strategies of a company will be defined. [1] The
market analysis is also known as a documented investigation of a market that is used to
inform a firm's planning activities, particularly around decisions of inventory,
purchase, work force expansion/contraction, facility expansion, purchases of capital
equipment, promotional activities, and many other aspects of a company.

Economy Analysis Vs. Market Analysis

Market and economic analyses have similar features. Both estimate the
net-benefits of a project investment based on the difference between
the with-project and the without-project situations. The basic difference
between them is that the market analysis compares benefits and costs
to the enterprise, while the economic analysis compares the benefits
and costs to the whole economy.
Benefits and costs for the whole economy

Benefits and costs for a particular market

Economic analysis is concerned with the true value a project holds for the society as a
whole. It subsumes all members of society, and measures the projects positive and
negative impacts. In addition, economic analysis would also cover costs and
benefits of goods and services that are not sold in the market and therefore have
no market price.
There are two more significant differences between market and economic analysis.
While market analysis uses market prices to check the balance of investment and the
sustainability of a project, economic analysis uses economic prices that are converted
from the market price by excluding tax, profit, subsidy, etc. to measure the legitimacy of
using national resources to certain projects. Market and economic analyses also differ
in their treatment of external effects (benefits and costs), such as favorable effects on
health. Economic analysis attempts to value such externalities in order to reflect the true
cost and value to the society. The inclusion of externalities raises difficult questions of
their identification and measurement in terms of money.
Underlining the integrated perspective of the IFM approach, cost-benefit analysis in
the present context, is meant to be a form of economic analysis.
However, it has to be noted that economic and market analysis are also
complementary. For a project to be economically viable, it must be markedly
sustainable. If a project is not marketly sustainable, there will be no adequate funds to
properly operate, maintain and replace assets. It has sometimes been suggested that
market viability should not be made a concern because as long as a project is
economically sound, it can be supported through government subsidies.