Scribd Logo
Carica

Benvenuto in Scribd!

  • The bubble that burst: Musharraf's economic miracle exposed

    Caricato da

    Azad Raza
    37 visualizzazioni2 pagine
    The bubble that burst summarizes the economic growth under Pervez Musharraf's rule in Pakistan. It states that the growth was driven by an unsustainable credit bubble that inflated sectors like automobiles and electronics, but burst when interest rates rose. It argues the growth figures were manipulated through arbitrary reductions to the reported population growth rate and suspiciously uniform increases in customs duty collection across import categories. In the end, it warns Pakistan does not need more "governance by gimmickry."

    Descrizione originale:

    Titolo originale

    The Bubble That Burst _ ePaper _ DAWNQ

    Copyright

    © Attribution Non-Commercial (BY-NC)

    Formati disponibili

    PDF, TXT o leggi online da Scribd

    Hai trovato utile questo documento?

    Questo contenuto è inappropriato?

    Segnala questo documento
    The bubble that burst summarizes the economic growth under Pervez Musharraf's rule in Pakistan. It states that the growth was driven by an unsustainable credit bubble that inflated sectors like automobiles and electronics, but burst when interest rates rose. It argues the growth figures were manipulated through arbitrary reductions to the reported population growth rate and suspiciously uniform increases in customs duty collection across import categories. In the end, it warns Pakistan does not need more "governance by gimmickry."

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Scarica in formato PDF, TXT o leggi online su Scribd
    Segnala contenuti inappropriati
    37 visualizzazioni2 pagine

    The bubble that burst: Musharraf's economic miracle exposed

    Caricato da

    Azad Raza
    The bubble that burst summarizes the economic growth under Pervez Musharraf's rule in Pakistan. It states that the growth was driven by an unsustainable credit bubble that inflated sectors like automobiles and electronics, but burst when interest rates rose. It argues the growth figures were manipulated through arbitrary reductions to the reported population growth rate and suspiciously uniform increases in customs duty collection across import categories. In the end, it warns Pakistan does not need more "governance by gimmickry."

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Scarica in formato PDF, TXT o leggi online su Scribd
    Segnala contenuti inappropriati
    di 2

    Thebubblethatburst

    ByKaiserBengali|4/2/201312:00:00AM GENPervezMusharrafhasreturnedtothecountry.Thistime,mercifully,hisreturnhasnotbeen heraldedbyaposseofarmedsoldiersclamberingoveragatetopavethewayforapowergrab. TheretiredgeneralplanstorunforaseatinparliamentandclaimshewillrestorePakistantowhere heleftoff.Thusanassessmentastowhathisregimeachievedduringhiseightyearruleisinorder. Thegeneral`sprincipalclaimtofameistheeconomy,whichhisimportedprimeministermanaged. ThehighpointisclaimedastheGDPgrowthrate,whichwasraisedfromapre2000averageofbelow fourpercenttoapost9/11averageofsixpercent.Astellarperformancewasthe7.5percent growthin200304andninepercentin200405. Thisfeatwasachievedonthestrengthofthefinance,manufacturingandservicessectors. Manufacturinggrowthaveragedninepercentduringthisperiodandregisteredarecord14percent in200304and15.5percentin200405. Growthintheservicessectorwasoversixpercentcomparedtobelowfourpercentinthepre2000 years. Itis,however,pertinenttoexaminehowthisdeedwasaccomplished.Beforeanyanalysisis presented,itisnecessarytonotethattheGDPgrowthrateisaweightedaverageofthevarious sectorsoftheeconomy;themanufacturingsectorgrowthrateisaweightedaverageofthevarious industriesandtheservicessectorgrowthrateisaweightedaverageofthevariousservicessectors. Thekeytounderstandingtheremarkableperformanceliesintheservicessectorandinthebanking sector,inparticular. Theregime`seconomicmanagerssetaboutcreatingamacroeconomicenvironmentthatheavily favouredthebankingsector,80percentofwhichwassoldtoforeigninterestsduringtheregime`s tenure.Theprincipalbenefitstothebanksaccruedfromtheopeningofthelargewindowof consumercredit;withtheresultthatthefinancialsectorvalueaddedgrowthfor200405and2005 06wasatanalltimehighatarecord31percentand42percent,respectively. Twoindustriesthatbenefitedthemostfromtheliberalexpansionofconsumerfinancingwere automobilesandelectricalgoods,withcreditfinancedsalesofautomobiles,televisionsets,etc, skyrocketing.Averagevalueadditiongrowthover20032005intheautomobileandelectricalgoods industrieswas43percentand45percent,respectively,comparedto14percentforthe manufacturingsectorasawhole. Thus,itwastheextraordinarycreditfinancedgrowthinbanking,automobilesandelectricalgoods sectorsthatprovidedthenarrowbaseforoverallGDPgrowth.Therestoftheeconomy,particularly agriculture,stagnated.

    However,thecreditfinancebubblebegantoburstby2007. Whenthedoublingofinflationfromfourpercentover200004toninepercentover200508forced ariseininterestrates,consumercreditdisbursementsdeclinedbyhalf,slowingfinancialsector growthtolessthan15percent.Withreducedconsumercredit,productionofautomobilesand electricalgoodsdroppedandwithoutputoftelevisionsetsfallingbyonethirdGDPgrowthwasback tobelowfourpercent.Whatwastrumpetedasextraordinarygrowthwasactuallyamirage,ahotair balloonthatburstatthefirstwhiffofcrisis. Highperformancefigureswerealsomanagedbywhatwasapparentlythemanipulationofdata. Post1998populationcensus,thepopulationgrowthratewasestimatedat2.5percent,basedon the19811998intercensusgrowth.However,thepopulationgrowthratewasarbitrarilyreducedto twopercentin2004,to1.9percentin2005andto1.8percentin2007. Giventhatnocensushadbeencarriedoutafter1998,therewasnobasisforconcludingthatthe populationgrowthratehaddeclined.Themotivefordepressingpopulationgrowthfiguresemanated fromthedesiretoshowenhancedpercapitaincome,i.e.averagenationalincome. Anaverageisderivedbydividingthenumeratorbythedenominatorandalowerdenominatorraises theaverage.Percapitaincomeisaproductofnationalincomedividedbypopulation.Bylowering populationestimatesbythestrokeofapen,theMusharrafregimemanagedtocontriveanincrease inpercapitaincomeforthecorrespondingyears. Anotherapparentcaseofdatamanipulationisthatoftaxcollection. Budgetarydataforcustomsdutyreceiptsisprovidedfor13categoriesofgoods,rangingfrom chemicals,ironandsteel,andmachinerytorubberandplasticproductsandmedicaland photographicequipment.Clearly,onewouldnotexpectcustomsdutycollectioninanyoneyearfor differentimportcategoriestoincreasebythesamepercentage. Ironically,however,thatisexactlywhathappened.Customsdutycollectionfor10outof13 categoriesofimportsisreportedtohavegrownatauniform3.1percentduring200203,at9.7per centduring200304andat27percentduring200405. OnehopesGenMusharrafdoesnothaveasimilarkindofcontrivedeconomicmiracleinmindwhen hetalksofrestoringPakistan`seconomytowhatitwasduringhisdays.Pakistandoesnotneedmore roundsofgovernancebygimmickry. Thewriterisaneconomist.

    Potrebbero piacerti anche