Pakistan growth strong but problematic.

Two different views of Pakistan's economy recently appeared in reaction to the March 21, 2007 release of the Asian Development Bank's (ADB) "Asian Development Outlook 2007." The ADB report includes a candid assessment of Pakistan's prospects for 2007.

Overall, the ADB report said that Pakistan was likely to maintain strong macroeconomic growth in 2007, but significant problems remain to be solved. Among the more troubling discussed were inflation and ongoing problems associated with the Pakistani earthquake on October 8, 2005.

A March 30, 2007 story in the Pakistan Times (Islamabad) mentioned none of the country's obvious problems and concentrated on the ADB's prediction that Pakistan would end 2007 having grown 6.8 percent. The headline read, "ADB foresees Pakistan Economy Growing around 7.0 [percent] in 2007." The story also said, "Pakistan, which forecasts annual economic expansion of as much as 8 per cent for the next five years, hopes higher growth will help reduce poverty."

A story on the same ADB report, published in the "Business Times" section of the Khaleej Times (Dubai) appeared with the following lead: "The Asian Development Bank (ADB) believes that the growing current account deficit, continuing high inflation, and the emerging power and gas shortages are potential risks to Pakistan's medium-term economic prospects."

The Times story also said the ADB was worried about any deterioration in the country's security situation, which could have an adverse impact on the economy.

The International Monetary Fund (IMF), for its part, estimates that Pakistan will grow 7.0 percent in 2007 as well. The IMF also estimates that growth in the rate of inflation for 2007 will be 7.3 percent when compared with 2006.

As of February 2007, the rate of inflation in Pakistan was estimated to be 7.4 percent, according to a January 18, 2007 report by the State Bank of Pakistan.

The same government report forecasts that Pakistan's nascent auto industry will grow by a factor of four by 2012-a positive sign for the country's developing consumer class.

TRANSITION TO DOMESTIC MANUFACTURING TO IMPROVE PAKISTAN'S OUTLOOK

The population growth rate for Pakistan is above the regional average, due in part to a birth rate of 33 per thousand inhabitants, which is above the average of 25 per thousand for South Central Asia. Job creation has not kept up with growth of the labor force in recent years, and it is likely that the situation will not improve further in 2007. Official unemployment is running about 6.5 percent (2006), and there is "substantial" underemployment as well.

Pakistan's population reached 166-million people mid-2006, which amounted to just over 10 percent of South Central Asia's 1.6-billion inhabitants. According to data released by the Population Reference Bureau (PRB), Pakistan's population will reach 229-million by 2025. Also, according to that source, Pakistan is going to have a population of 295-million people in 2050.

The PRB revealed that 34 percent of Pakistan's population lived in urban areas during 2006, and that the country's population density is high at 539 people per square mile. Pakistan's land area is exactly the same as that of Mozambique, but Pakistan has well over eight times as many inhabitants. The CIA's World Factbook, indicates that 39 percent of Pakistan's population was birth to 14 years old in 2005, while 57 percent was 15 to 64 years old, and 4 percent of the populace was 65 years of age and over.

CIA statistics revealed that the country's population growth rate was 2.09 percent in 2006. According to the United Nations Population Division, in the year 2050, 23 percent of Pakistan's population will be birth to 14 years old, while 65 percent will be aged 15 to 59, and 12 percent of the populace will be 60 years of age and over.