Research Analyst
Jan 18 - 24, 2010

GDP is one of the primary indicators used to gauge the health of a country's economy. It represents the total dollar value of all goods and services produced during a specific period.

It is the market value of all the output produced in a nation in one year.


COUNTRIES 2005-06 2006-07 2007-08 2008-09
Pakistan 5.8 6.8 4.1 2.4
India 9.8 9.3 7.3 4.5
China 10.4 10.7 10.4 10.7
Bangladesh 6.5 6.3 5.6 5.0
Indonesia 5.5 6.3 6.1 2.5
Malaysia 5.8 6.3 4.6 -3.5

Pakistan's economy weathered unprecedented set of challenges during financial year 2008-09.


In Pakistan, the manufacturing sector is witnessing erosion of its share in the GDP. Its share stood at 18.2%, a lowest ever in the last five years. The process of deceleration in growth that started in the fiscal year (2004-05) continued unabated partly because of acute energy shortages and more importantly structural problems.

Output in the manufacturing sector contracted 3.3% in 2008-09 as compared to expansion of 4.8% the preceding year. The target was set at an over ambitious 6.1%. Small and medium manufacturing sector maintained its healthy growth of 7.5% last year.

Large scale manufacturing which accounts for 12.1% in the GDP faced the most difficult period during the recent time and depicted a negative growth of 7.67% during July-March 2008-09 compared to 4.0% growth in the same period last year.

Main items showing growth included fertilizer (21.5%), nonmetallic mineral products (4.8%), chemicals (3.8%), leather products (2.9%), paper & paper board (2.9%) and engineering products (0.8%). Major items showing decline included automobiles (39.0%), electronics (31.3%), petroleum products (9.2%), food & beverages (10.5%), rubber products (4.0%), and iron & steel products (5.6%).

There was negative growth almost in all the major heads barring one or two.


Pakistan has also seen a major transformation in the economic structure and the share of the services sector increased to 53.8% in 2008-09. The services sector grew 3.6% against the target of 6.1%.

Contagious effects of global financial meltdown were felt in the Pakistan's financial sector. The growth in the financial sector slowed down to 12.9% in 2007-08, but registered a negative growth of 1.2% in 2008-09.

The performance of this sector shows that Pakistan's financial sector is an integral part of the world's economy and feeling the heat of the financial crisis ravaging the international financial markets.


SECTOR 2005-06 2006-07 2007-08 2008-09
Agriculture 1.4 0.9 0.24 1.00
Industry 1.1 2.3 0.45 -0.92
Manufacturing 1.6 1.6 0.91 -0.64
Services 3.3 3.6 3.41 1.92

Transport, storage, and communication subsectors depicted a sharp deceleration in growth, to 2.9% in 2008-09 as compared to 5.7% last year. Value addition in this sector is based primarily on the profits and losses of Pakistan Railways, Pakistan International Airlines and other airlines, Pakistan Posts & Courier Services, Pak Telecom, and motor vehicles.

Mechanized road transport depicted a growth of 2.9%, followed by road transport (6.4%), communication sector (3.6%), and storage (2.7%).

The value addition of Pakistan Railways declined 6.4%. Other sectors that showed a decline were air transport (2.1%) and pipeline transport (8.0%). Value addition in the wholesale and retail subsectors is based on the margins taken by the traders on the transactions of commodities traded in the wholesale and retail markets. In 2008-09, it grew 3.1% as compared to 5.3% last year and the target for the year was 5.4%.


The CPS has been ignored during the last eight years. It comprises of sectors like agriculture and industry. It accounts for 46.2% of the GDP. Notwithstanding the stellar growth of the agriculture sector, CPS was mainly responsible for modest GDP growth at 2%.







GDP (%) 2.0 3.3 2.5-3.5
Average CPI Inflation (%) 20.8 9.0 10.0 - 12.0
% of GDP
Fiscal Deficit 5.2 4.9 4.7-5.2
Current Account Deficit 5.3 5.3 4.7-5.2

In the industrial sector, the growth mainly came from a relatively smaller subsector mining & quarrying. It witnessed a negative growth of 3.6 percent, which was neutralized by a 4.7% growth posted by the agriculture sector, which in turn helped in depicting overall marginal growth of 0.2% by the CPS. This was the worst performance of the CPS in more than a decade.


GDP is widely used by economists to gauge the health of an economy, as its variations are relatively quickly identified. However, its value as an indicator for the standard of living is considered to be limited. The government has projected GDP growth at 3.3% for financial 2009-10.