Ten indicators

Gross Domestic Product: GDP is the “total value of everything produced in a country.” GDP is the mother of all economic indicators because it “gives information about the size of the economy and how an economy is performing.” According to Nobel laureate Paul Samuelson, GDP is “truly among the great inventions of the 20th century.”

GDP growth is the ‘single best indicator of economic growth’. For the decade of the 60s, 70s and the 80s, the average annual GDP growth was recorded at 6.8 percent, 4.8 percent and 6.5 percent, respectively. In 2018, the rate of our GDP growth stood at 5.8 percent. By 2019, GDP growth had nose-dived to 0.9 percent. On February 26 in 2000, Karachi reported the first case of Covid-19 and for the first time in 68 years our GDP growth rate, recorded at -1.5 percent, went into negative territory. That’s truly historical (the last time our rate went into the negative was 1952). Double thumbs down on GDP.

GDP per capita: In 1960, our GDP per capita (per person) stood at $83. By 2018, it had climbed to $1,482. In 2019, GDP per capita declined to $1,284, its first major decline in at least 60 years. By 2020, it had further come down to $1,130. Double thumbs down on GDP per capita.

Inflation: Historically, Pakistan has been a low inflation economy. Between 1957 and 2020, the rate has averaged under 8 percent. In 2008, it hit a high of 20 percent and a low of 2.5 percent in 2015. Between 2018 and 2020, the price of wheat flour, sugar and electricity have surged by around 100 percent. Double thumbs down on inflation.

Poverty: In terms of poverty alleviation, Pakistan made significant progress in the past two decades. A high rate of inflation means increased poverty. In 2018, 70 million Pakistanis were living below the line of poverty. Now there are roughly 90 million Pakistanis living below the line of poverty. Double thumbs down on poverty.

Exchange rate: In August 2018, the rupee-dollar parity stood at Rs122 to-a-dollar. The rupee has since lost 30 percent of its value. Thumbs down on the exchange rate.

Exports: In 2013, Pakistan’s exports of goods and services (current US$) peaked out at $30.7 billion. Over the 2018-2020 period, exports at around $28 billion have been more or less flat even in the face of a massive devaluation of the rupee against the dollar. Thumbs down on exports.

Foreign direct investment (FDI): Over the 2018 to 2020 period, FDI went down from $2.78 billion in FY2018 to $1.36 billion in FY2019 and then went up to $2.56 billion in FY2020. Thumbs up on FDI.

Debt: Our total debt and liabilities have gone up from Rs30 trillion in 2018 to a current figure of Rs45 trillion. Each and every Pakistani family is now indebted to the tune of Rs1.5 million. Alarm bell number 1: Our total debt service as a percentage of our Gross National Income has shot up from 1.9 percent in 2018 to 4 percent. Alarm number 2: Our total debt service as a percentage of our exports has shot up from 19 percent in 2018 to 35 percent. Double thumbs down on debt.

Foreign exchange reserves: SBP’s reserves have gone up from $9.7 billion two years ago to $12.9 billion. Thumbs up on reserves.

Trade deficit: The July-November five-month trade deficit was recorded at $9.6 billion. The deficit has been increasing at an increasing rate hitting $14.96 billion for the July-January period. Thumbs down on trade deficit.

Final score. Double thumbs down: 5. Thumbs down: 3. Thumbs up: 2.

The writer is a columnist based in Islamabad.

Email: farrukh15@hotmail.com Twitter: @saleemfarrukh