Pakistan Development Update, April 2014

Pakistan's economy is weak but at a turning point. Growth recovery is underway, with the projected GDP growth approaching 3.6-4.0 percent, driven by dynamic manufacturing and service sectors, better energy availability, and early revival of investor confidence. Inflation is steady at 7.9 percent (y-o-y). The fiscal deficit is contained at around 6 percent of GDP due to improved tax collection and restricted current and development expenditure. The current account deficit remains modest, at around 1 percent of GDP, supported by strong remittances and export dynamism, and the external position is slowly improving since monetary and exchange rate policies switched gear toward rebuilding reserves last November. Performance under the IMF program remains satisfactory, with the 2nd Review concluded on March 24. Domestic and external risks, however, remain high, but are declining. Economic activity is gradually improving. Preliminary data for FY14 show growth picking up, driven mainly by services and manufacturing. A significant correction of a loose fiscal stance is taking place to ensure sustainability. Pakistan is on track to meet a fiscal deficit target of 5.8 percent of GDP in FY14. The external position is fragile but strengthening. The current account deficit was small, at around 1 percent of GDP by end-FY13 and remains so. In contrast, net official foreign exchange reserves declined to the equivalent of 1.3 months of imports at the end of June 2013 (bottoming down to 0.6 month of imports by the end of November 2013). Three sources of risk appear worrisome. Pakistan imports more than it exports, the latter being constrained by low productivity and competitiveness, limited access to reliable energy, and cumbersome business regulations.

Bibliographic Details

Main Author:	World Bank
Language:	English en_US
Published:	Washington, DC 2014-04
Subjects:	ACCESS TO INFORMATION, ACCOUNTING, AGGREGATE DEMAND, AGRICULTURAL COMMODITY, ARREARS, ASSET PORTFOLIO, AUCTION, AUCTIONS, AUDITS, BALANCE OF PAYMENTS, BALANCE SHEET, BANK ACCOUNTS, BANK BORROWING, BANK BORROWINGS, BANK DEBT, BANKING SECTOR, BANKING SYSTEM, BASIS POINTS, BENEFICIARIES, BLUE CHIP, BOND, BOND INDEX, BONDS, BOOST TO GROWTH, BROAD MONEY, BUDGETARY DEFICIT, BUDGETARY SUPPORT, BUSINESS REGULATIONS, CAPITAL ACCOUNT, CAPITAL ADEQUACY, CAPITAL GAINS, CAPITAL MARKET, CAPITAL MARKET REFORMS, CASH TRANSFERS, CENTRAL BANK, COMMERCIAL BANKS, COMMODITIES, COMMODITY PRICES, CONSUMER SPENDING, CONTINGENT LIABILITIES, CORPORATE GOVERNANCE, CORPORATE GOVERNANCE STANDARDS, COUNTRY RISK, CREDIT BUREAU, CREDIT INFORMATION, CREDITORS, CURRENT ACCOUNT, CURRENT ACCOUNT BALANCE, CURRENT ACCOUNT DEFICIT, DEBT, DEBT REPAYMENTS, DEBT SERVICE, DEPOSITS, DEVELOPMENT BANK, DIRECT INVESTMENT, DISBURSEMENT, DISBURSEMENTS, DOMESTIC BORROWING, DOMESTIC DEBT, DOMESTIC INTEREST RATES, DOMESTIC SECURITIES, ECONOMIC ACTIVITY, ECONOMIC DEVELOPMENTS, ECONOMIC GROWTH, ECONOMIC REFORM, EMERGING MARKETS, EQUITY MARKET, EUROBOND, EXCHANGE COMMISSION, EXCHANGE RATE, EXPENDITURE, EXPENDITURES, EXPORT GROWTH, EXPORTERS, EXPOSURE, EXTERNAL DEBT, EXTERNAL FINANCING, FARMERS, FEDERAL GRANTS, FEDERAL TAXES, FINANCIAL FLOWS, FINANCIAL HEALTH, FINANCIAL INFLOWS, FINANCIAL MARKETS, FINANCIAL SECTOR, FINANCIAL SECTOR DEVELOPMENT, FINANCIAL SECTOR DEVELOPMENTS, FINANCIAL SERVICES, FINANCING NEEDS, FISCAL BURDEN, FISCAL CONSOLIDATION, FISCAL DEFICIT, FISCAL DEFICITS, FISCAL DISCIPLINE, FIXED RATE, FLOATING DEBT, FOREIGN ASSET, FOREIGN ASSETS, FOREIGN DEBT, FOREIGN EXCHANGE, FOREIGN EXCHANGE RESERVES, FOREIGN INVESTMENT, FOREIGN PORTFOLIO, FOREIGN PORTFOLIO INVESTMENT, FREE ACCESS, FREE TRADE, FREE TRADE AGREEMENT, GOVERNANCE ISSUES, GOVERNANCE STANDARDS, GOVERNMENT BORROWING, GOVERNMENT BORROWINGS, GOVERNMENT PAPERS, GOVERNMENT SECURITIES, GROWTH RATES, INCOME, INFLATION, INFLATION RATES, INFLATIONARY EXPECTATIONS, INFLATIONARY PRESSURES, INSTITUTIONAL INVESTORS, INSURANCE, INTEREST PAYMENTS, INTEREST RATE, INTEREST RATE CHANGES, INTEREST RATE RISK, INTEREST RATES, INTERNAL CONTROLS, INTERNATIONAL BEST PRACTICES, INTERNATIONAL BUSINESS, INTERNATIONAL MARKET, INTERNATIONAL MARKETS, INTERNATIONAL TRADE, INVESTING, INVESTOR CONFIDENCE, ISSUANCE, LEVEL PLAYING FIELD, LEVY, LIFE INSURANCE, LIMITED ACCESS, LOAN, LOAN PORTFOLIO, LOAN SIZE, MACROECONOMIC STABILITY, MARKET CAPITALIZATION, MARKET CONFIDENCE, MARKET DIVERSIFICATION, MARKET LIQUIDITY, MATURITIES, MATURITY, MICRO INSURANCE, MICROFINANCE, MICROFINANCE SECTOR, MONETARY FINANCING, MONETARY FUND, NON-PERFORMING LOANS, NPL, OIL PRICES, OUTPUT, PORTFOLIO, PORTFOLIO INVESTMENT, PRIVATE CREDIT, PRIVATE INVESTMENT, PRIVATE SECTOR CREDIT, PRIVATIZATION, PRIVATIZATIONS, PRODUCTION CAPACITY, PUBLIC DEBT, PUBLIC INVESTMENT, PUBLIC OFFERINGS, PUT OPTION, REAL ESTATE, RECURRENT EXPENDITURE, REFORM PROGRAM, REGISTRATION PROCESS, REGISTRATION SYSTEM, REGULATOR, REGULATORY FRAMEWORK, REMITTANCE, REMITTANCES, REPAYMENT, REPAYMENTS, RESERVE, RESERVES, RETURN, RETURN ON ASSETS, RETURNS, RISE IN INFLATION, RISK OF DEBT, SAFETY NETS, SAVINGS, SETTLEMENT, SHORT-TERM INSTRUMENTS, SOCIAL SAFETY NETS, SOLVENCY, SPOT MARKET, STATE BANK, STOCK EXCHANGE, STOCK MARKET, STOCK MARKET CAPITALIZATION, STOCK MARKETS, STRUCTURAL PROBLEMS, SUPPLY CHAIN, SUSTAINABILITY ANALYSIS, SUSTAINABLE REFORMS, T-BILLS, TAX, TAX COLLECTION, TAX EXEMPTIONS, TAX OBLIGATIONS, TAX POLICY, TAX RATES, TAX RETURNS, TAX SYSTEM, TELECOMMUNICATIONS, TOTAL DEBT, TRADE BALANCE, TRADE DEFICIT, TRADE RELATIONS, TRADE SECTOR, TRADING, TRANCHE, TRANSPARENCY, TREASURY, TREASURY BILLS, TRUST FUND, TURNOVER, UNION, VARIABLE RATES, WEAK CORPORATE GOVERNANCE, WITHHOLDING TAX,
Online Access:	http://documents.worldbank.org/curated/en/2014/04/19359562/pakistan-development-update https://hdl.handle.net/10986/17788
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