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Key Economic Data 
 
  2004 2003 2002 Ranking(2004)
GDP
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)

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Update No: 032 - (26/09/08)

Not really a friendly relationship
PPP President Zardari succeeded in being elected president in September, despite the PML-N voting for its own candidate, after a part of the opposition agreed to support his candidacy. Some observers only give Zardari only one or two years before the army moves in to take power again, even if Chief of Army Staff Kayani has ordered 200 military officers to return to the army and leave the civilian agencies to which Musharraf had appointed them, hinting a withdrawal from politics. Compared to his predecessors (his wife and Nawaz Sharif), Zardari lacks many of the skills of the politicians and starts with a low credibility from the outset. Moreover, everything seems to be conspiring against him: the faltering economy, the expanding insurgency and the worsening relations with the Americans. Despite his stated desire to cooperate with Washington, the latter’s increasingly aggressive operations in Pakistani territory are making things very difficult for Zardari. Have the Americans merely lost their temper after so many frustrating efforts to cooperate with the Pakistani military establishment, or do they lack any trust in Zardari’s chances of improving the situation? The worst incident was in September, when Pakistani soldiers shot at American troops allegedly preparing to enter Pakistani territory. Now that president Bush has authorised raids inside Pakistani territory without the authorisation of the Pakistani authorities, inevitably this kind of incident is only bound to increase. If Islamabad fails to act on its statements to protect the national territory from such kind of incursions, its credibility will fade quickly, giving the army a good excuse to reassert itself, although holding power right now in Pakistan, might truly be described as holding the poisoned chalice.

Sharif moves again
At the end of August Sharif and his PML-N finally quit the coalition government, in protest at the failure to reinstate all the judges sacked by Musharraf and to the decision of Zardari to stand for President. Only about a quarter of the judges sacked by Musharraf have been reinstated so far and few bel ieve Zardari’s promise of gradually reinstating them all, but Sharif’s decision is clearly also motivated politically. Sharif will not, for the moment being, try to make the government fall and guaranteed cooperation from the ranks of the opposition. It is clear, however, that he will represent a lingering threat for Zardari, as he will try to mobilise support exploiting the difficult economic situation and the contradictory relationship with Washington. Sharif, a consummate politician has a much better pulse of the electorate than Zardari (by comparison a political pygmy), and has carefully been positioning himself to win the next elections - if there will be any! It might be remembered that in his previous stint as PM he tried, by Mussolini-type methods, to introduce Wahhabi-style Sharia law, in place of Pakistan’s constitutional system. Fortunately due to the personal courage of the old gentlemen in the Parliament’s Upper House he did not succeed.

Inflation going out of control
The official inflation rate has now reached 25.3%, but some economists reckon that the actual one could be as high as 60%. This represent a massive increase over just a few months ago and is one of the main factors behind the perception of crisis among the population at large. The State Bank of Pakistan has increased the interest rate by one point to 13%, which is likely to be insufficient to stem the tide. However, the Bank also fears that if it continues to raise interests, the economy will grow to a standstill. In this situation, it is understandable that the government might not want to further reduce subsidies on fuel, which currently stand at 12 rupees per litre. A piece of good news was however released in September, that is a 40% increase in foreign investment year-on-year in July, mainly due to a major upsurge of investment in the telecommunications sector, which accounted for by far the lion’s share of all investment. The Banking sector also attracted more investment, due to some mergers and acquisitions. A massive one-off investment by the Singapore Port Authority in Gwadar also occurred in July, thereby having the effect of a ‘dope’ on the statistics.

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