The Economic Co-ordination Committee (ECC) of the Cabinet declared Pakistan as the lead country in South Asia in terms of inflation, followed by neighbour, India. However, Finance Minister Dr Abdul Hafeez Shaikh urged that his Cabinet colleagues should highlight the achievements in the economy in print and electronic media for public consumption.
"A regional comparison of inflation suggests that Pakistan, with 15.7 percent, continues to experience higher inflationary pressures as compared to other South Asian countries (India 9.6 percent, Bangladesh 8.1 percent, Sri Lanka 6.9 percent and China 4.5 percent)" shows an official document exclusively made available to Business Recorder. Analysts say they fear that inflation will further rise after massive increase in petroleum prices, expected to be announced on January 31.
The documents suggest that various economic indicators of economy have shown mixed signs. The production in large scale manufacturing (LSM) sector contracted to 4.7 percent in November, which is the fourth consecutive negative data point. The external trade deficit widened in the on-going fiscal year 2010-11 (July-December) to $8.1 billion, from $6.9 billion of last year.
The major inflation gauges ie Consumer Price Index (CPI), Whole Sale Price Index (WPI) and Sensitive Price Index (SPI) for December 2010 are estimated at 15.7 percent, 26.4 percent and 21.7 percent respectively. Year on year CPI-based inflation registered an increase of 15.7 percent in December 2010.
Food inflation rose by 20.4 percent and contributed 8.5 percentage points (or 54.1 percent) to inflation rate in December, while non-food inflation recorded 11.8 percent and contributed approximately 7.2 percentage points (or 45.9 percent) to CPI inflation. The stock position of wheat was recorded at 72,08,000 tons on January 20, 2011 as compared to 62,53,000 tons on January 20, 2010. Similarly, the stock position of sugar was recorded at 12,56,000 tons in January 2011 as compared to 12,49,000 tons in January 2010.
The ECC was further informed that workers' remittances amounted to $5.291 billion in July-December 2010-11 as against $4.529 billion in July-December 2009-10, showing an increase of 17 percent over the same period of last year and the international reserve position of Pakistan strengthened, as gross foreign exchange reserves reached $17.2 billion as on January 21, 2011.
FBR net tax collection amounted to Rs 659 billion during July-December 2010-11 as compared to Rs 582 billion in same period last year, thereby positing an increase of 13 per cent. Foreign direct investment (FBI) declined to $829 million during July-December 2010-11 as against $969 million in the comparative period of last year, thereby showing a negative growth of 15 percent.
The Finance Minister, who apparently is unable to take economically viable decisions due to political compulsions, expressed satisfaction "that it is the first time in the history of the economy of Pakistan that remittances have reached $10 billion and foreign exchange reserve more than $17 billion". The current account deficit fell to $601 million in December 2010 as compared to $2.172 billion on October 2008.