Economic indicators of Pakistan

Economic indicators can be classified into three categories according to their usual timing in relation to the business cycle: leading indicators, lagging indicators, and coincident indicators

Leading Indicators
An economic indicator that changes before the economy has changed. Examples of leading indicators include production workweek, building permits, unemployment insurance claims, money supply, inventory changes, and stock market return. Leading indicators foreshadow actual results long before they show up in conventional business statistics.

Coincident Indicators
Coincident indicators, change about the same time as the overall economy. An economic indicator which varies directly with and at the same time as, the related economic trend, thereby providing information about the current state of the economy. E.g. Number of employees on non-agricultural payrolls, Personal income less transfer payments, Industrial production, manufacturing and trade sale, Average hours worked in manufacturing, Unemployment rate and GDP Growth rate.

Lagging Indicators
Lagging indicators change after the overall economy, but these are of minimal use as predictive tools. An economic indicator that changes after the overall economy has changed; examples include labor costs, business spending, the unemployment rate, the prime rate, outstanding bank loans, inventory book value and CPI (Consumer Price Index).

Leading indicators: Money Supply, Change in Inventory, Stock Market Returns. Lagging indicators: Prime Rate Charged by the banks, CPI (Consumer Price Index). Coincident indicators: Industrial Production, Unemployment Rate, GDP,
Employment in non-agriculture.

Prime Rate Charged by Banks (Pakistan)

2005 (6.19), 2006 (7.96), 2007 (8.05), 2008 (5.21), 2009 (3. 25)

Unemployment rate

Year Unemployment rate 200 5 200 6 200 7 200 8 200 9 8.30 % 6.60 % 6.50 % 5.60 % 7.40 %

Pakistan Industrial production growth Year rate

200 5 200 6 200 7 200 8 200 9

Industrial production growth rate 13.10 % 10.70 % 6.00 % 8.00 % 4.60 %

GDP (current US$) (in billions)

Year Pakistan

2005 109.6

2006 127.50

2007 143.17

2008 163.89

2009 161.99

GDP growth rate

Year GDP growth rate 200 5 200 6 200 7 200 8 200 9 7.7 % 6.2 % 5.7 % 2% 3.7 %

Consumer price index (2005 = 100)

2005(100), 2006(107.9), 2007(116.1), 2008(139.7), 2009(158.7)

Changes in inventories (current US$ in millions)

(2005)1,775.54 (2009) 2,591.83

(2006)2,039.99

(2007)2,290.73

(2008)2,622.27

Money supply (M2) (US $ in billions)

(2005) 20.93, (2006)19.25, (2007) 27.63, (2008) 25.07, (2009) 15.55

Stock Market Return 2005(56%), 2006(4%), 2007(35%), 2008(-60%), 2009(61%)

Employment in non-agriculture (% of total employment)

(2005) 57, (2006) 56.6, (2007) 56.4, (2008)54.92

Analysis of the indicators:

The prime rate of banks decreased from the year 2007 onwards. The prime reasons being the, drop of savings in bank as consumers began to withdraw cash as inflation came and expenditures increased. The unemployment tae started increasing in 2008; the prime reasons can be increase in political tensions, terrorism and other incidents, causing strikes, other holidays, or economic recessions/increase in inflation. The industrial production growth tae, started to decrease from 2005 onwards, all of the above reasons can be accounted for plus the increasing tariffs in electricity and fuel. GDP growth rate of Pakistan in consistently declining that shows the economy is moving downwards. CPI (Consumer Price Index) is increasing throughout 20052009 indicating the rise of prices that is inflation. Inventory change is rising in the period but

falls in last year (2009). Money supply is considerably less in 2008 and 2009 as compared to previous year. Stock market return is negative in 2008 because of great recession in country. Employment in non-agricultural sector is also declining. So the overall effect is adverse in the economy of Pakistan showing that the economy of Pakistan is in the state of Recession.

Sources

www.sbp.org.pk/ www.data.worldbank.org www.pro-pakistan.com www.indexmundi.com www.tradingeconomics.com