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Key Economic Data 
  2004 2003 2002 Ranking(2004)
Millions of US $ 96,100 82,300 73,300 44
GNI per capita
 US $ 600 520 480 160
Ranking is given out of 208 nations - (data from the World Bank)

Books on Pakistan


Update No: 028 - (01/06/08)

Ammunition for the pessimists
Views about the state of the Pakistani economy continue to differ, with opposed optimists and pessimists maintaining their positions. Recent economic data has been providing ammunition to the pessimists. Despite claim that Pakistani industries continue to grow well, frequent lay-offs of staff are reported in the media. Power cuts of as much as 12 hours a day remain a common occurrence, while rioting related to high food prices also contributes to cast a shadow on the economic landscape. Most importantly, capital flight is significantly weakening the Pakistani rupee, which in May reached 70 to a dollar, the lowest level in many years and this despite the fact that the dollar is certainly not at peak highs. For the moment being the government continues to show a brave face and its economic development strategy seems to be still quite in line with that of its predecessor. For example there is now talk of opening new Export Processing Zones, which offer facilitations to export-oriented industries.

Anti-Musharraf front disintegrates faster than expected
On top of this economic turmoil, the ruling coalition split in May over the inability to agree a strategy for the re-instatement of the Supreme Court judges sacked by Musharraf. Nawaz Sharif, intent on recovering a political base large enough to be able to compete for the top jobs in government, is mobilising public opinion behind himself by pushing for the reinstatement of the judges through a direct order of the executive, even if according to the constitution only the President has such power. Wary of a confrontation with the President and with the existing Supreme Court, Zardari and the PPP want to modify the Constitution first. Nawaz Sharif’s quick exit from the coalition barely three months after the elections suggest that he might have been seeing exactly this outcome. Being a junior partner in government did not suit him; he probably sees as much more advantageous to criticise the government from the ranks of the opposition, particularly as high food prices and a complex economic landscape demand unpopular decisions in Islamabad. It is not clear what the next move in the Pakistani political scene will be; the PPP seems to be hinting that it might make a deal with Musharraf’s party, the PML-Q. Such a deal would please the Americans and the British, but would be unpopular in the streets, probably exactly what Nawaz Sharif wants. The other winner in the new predicament is Musharraf. While Zardari seemed intent on reducing the constitutional powers of the president before the crisis, he might now have to forgo those plans (largely instigated by Nawaz Sharif) and leave Musharraf’s powers undiminished. As we have earlier speculated, Zardari might well discover that working with Musharraf, would be better for him than trying to accommodate the experienced former PM Nawaz Sharif, who clearly has his own agenda, but lacks the parliamentary seats to implement it. 

Dangerous friendships
In the meanwhile relations between Pakistan and the Americans are becoming increasingly tense as the latter push for being allowed to carry out military operations in the NWFP. Some incidents have already occurred, leading to the killing of one Pakistani serviceman, leading in turn to a wave of opprobrium in Pakistan. Although there is very strong opposition in the country to any direct American intervention, a possible new ruling coalition of PPP and PML-Q might be more amenable to cooperating with the Americans, but at the expense of even greater chunks of the residual popularity of its components and particularly the PPP. At least until the collapse of the PML-N and PPP coalition in May, the trend had been towards deals with the militants. A deal had even been agreed even with Beitullah Mehsud, the leader of the most radical wing of the Pakistani militants, but collapsed rapidly after the Pakistani army refused to withdraw from its positions in the region.

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