2016年-世界发展银行全球_Pakistan_Development_Update_April_2016___From_Stability_to_Prosperity_67页_4mb

PAKISTAN DEVELOPMENT UPDATE SUMMARY

Core Content

This document is a Pakistan Development Update published by the World Bank in April 2016. It provides an analysis of the country's economic performance, outlook, and structural challenges. The report is aimed at informing the Government of Pakistan, researchers, think-tanks, and the general public about the state of the economy and the Bank's senior management.

Main Points

Economic Growth

• South Asia's growth remained strong in 2015 despite global economic turmoil, with GDP growth of 7 percent.
• Pakistan's growth in FY16 (Financial Year 2016) is expected to be 4.5 percent, slightly higher than FY15's 4.2 percent, but still below the 5.5 percent target.
• Private consumption is the main driver of growth, contributing over half of FY16 GDP growth due to rising remittances and a looser monetary policy.
• Agricultural growth slowed to 2.0–2.5 percent in FY16 due to a poor cotton harvest, while large-scale manufacturing (LSM) growth improved to 3.9 percent in H1FY16.

Fiscal Developments

• Fiscal consolidation is progressing, with a 20 percent increase in tax revenue in the first eight months of FY16.
• Tax revenue-to-GDP ratio rose by 1.5 percentage points to 11 percent in 2015, but remains well below emerging economies and the IMF's estimated tax capacity of 22.3 percent.
• Government expenditure grew by 8.1 percent, but fiscal deficit was 20 percent lower than in H1FY15.
• PSDP (Public Sector Development Program) growth was 24 percent at the federal level and 54 percent at the provincial level.

Trade and Balance of Payments

• Exports declined by 11.1 percent in H1FY16 due to weak global demand and low oil prices, which also reduced the import bill by 9.1 percent.
• Workers' remittances grew by 6.2 percent, helping to offset the trade deficit.
• Pakistan's export base is narrow, and trade facilitation is poor, with vessel charges in Karachi being 10 times those in Dubai or Singapore.
• Import tariffs are twice the global average, putting local manufacturers at a disadvantage.

Monetary and Inflation Developments

• Inflation was low in H1FY16 but started to rise in H2FY16, reaching 3.3 percent.
• Monetary policy rate was cut to 6.0 percent, a decade low, in H1FY16, but increased inflation has led to a halt in further easing.
• Broad money supply grew by 13 percent in H1FY16 compared to 10.9 percent in the same period in FY15.

Outlook and Challenges

Growth Outlook

• Growth is expected to modestly increase in FY16 to 4.5 percent, driven by LSM growth of 4.0–4.5 percent and services growth of over 5 percent.
• Agricultural growth is expected to remain weak, below 2.5 percent.
• Medium-term growth is projected to be moderately higher, supported by investment and productivity gains in services and manufacturing.

Structural Reforms

• Structural reforms are crucial to improving economic performance and investment.
• Electricity sector reforms are necessary to address funding gaps and load-shedding.
• CPEC (China-Pakistan Economic Corridor) is expected to boost FDI and investment over the medium-term.
• Fiscal consolidation is ongoing, but low savings rates and weak policy complementarities remain challenges.

Risks and Challenges

• Global economic uncertainty and low oil prices could reduce remittances and FDI.
• China's slowdown and GCC countries' reduced public spending could negatively impact Pakistan's exports and investment.
• Domestic structural issues such as poor electricity supply, limited fiscal space, and complex trade policies continue to hinder growth.

Special Sections

1. Export Competitiveness

   • Pakistan's narrow export base and poor trade facilitation are major constraints.
   • High import tariffs and protectionist policies make it difficult for local manufacturers to compete globally.
   • Remittances are a key factor in offsetting trade deficits, but their sustainability is uncertain.

2. Electricity Sector Reform

   • The electricity sector faces a funding gap, with circular debt and inefficient distribution being major issues.
   • Privatization of distribution and elimination of circular debt are needed to improve the sector.

3. Urbanization

   • Urbanization presents both opportunities and challenges for economic growth.
   • Infrastructure development and job creation are key benefits, but urban inequality and housing shortages are potential problems.

4. Provincial Development Spending (Punjab Case)

   • Provincial development spending has increased significantly, with Punjab seeing a 54 percent growth.
   • This reflects the government's commitment to development, despite fiscal restraint at the national level.

Key Findings

• Macroeconomic stability has improved, with rising foreign reserves, reduced fiscal deficits, and low inflation.
• Private sector credit is showing signs of growth.
• GDP per capita growth has been slow, with only a 50 percent increase over the past 25 years.
• The new poverty line indicates a higher focus on inclusive growth, identifying 30 percent of the population as poor (about 60 million people).
• Investment is expected to increase marginally in FY16, but remains below the 15.1 percent of GDP seen in FY15.

Conclusion

Pakistan's economy is showing modest recovery, but growth remains below targets and is dependent on external factors such as CPEC investment and remittances. Domestic reforms in areas like electricity, tax collection, and trade facilitation are essential for long-term stability and growth. The policy environment is improving, but structural challenges continue to hinder progress.