Even as Pakistan’s polity has been thrown into confusion by the disqualification of its prime minister by its Supreme Court, its economy is reeling from 18-hour power cuts. The Pakistan People’s Party (PPP) government, ending its five-year term, has had a mixed record with the economy. As Table 1 shows, it inherited growth momentum from the Musharraf years, but its growth began to dip even before the financial crisis hit, and is now steady at well below 4 per cent a year. That Pakistan’s steady growth is lower than India's can be largely explained by its low savings rate — as Table 2 shows, domestic savings as a percentage of GDP fluctuate between nine and 13 per cent most years. For comparison, India’s is between 22 and 27 per cent, and East Asian countries regularly clock savings rates in the 30s.
Under the PPP, things have not improved greatly. As Table 3 shows, exports as a percentage of GDP have gotten smaller and smaller. Admittedly, the defence budget, as a proportion of GDP — while still high — has shown a marked tendency to shrink under civilian rule, according to Table 4.
And, as shown in Table 5, while expenditure on education and health has remained static, total social sector spending as a percentage of GDP has risen. Inflation, while still very high, was even higher a few years ago, at about 25 per cent a year; it has been brought sharply under control now, and is less than India’s, as is visible in Table 6.(Click here for tables)
The energy situation is particularly problematic. As Table 7 shows, capacity addition has been very slow, and inputs have actually declined. The comparative chart of the Sensex and the Karachi Stock Exchange’s ‘Karachi 100’ index is instructive; from the same position in 2005, they have diverged widely since.
