Pakistan Economy in the light of Business Cycles- 2009-14 Muhammad Arif Editor At Large The Financial Daily Former Head of FSCD State Bank, Head of Research in Arif Habib Investments and professor on Finance in different Universities including KASBIT

Introduction The term business cycle (or economic cycle) refers to economy-wide fluctuations in production, trade and economic activity in general over several months or years in an economy organized on free-enterprise principles These fluctuations occur around a long-term growth trend, and typically involve shifts over time between periods of relatively rapid economic growth (an expansion or boom), and periods of relative stagnation or decline (a contraction or recession).

Business Cycles the Kitchin inventory cycle of 3–5 years (after Joseph Kitchin) the Jugular fixed investment cycle of 7–11 years (often identified as 'the' business cycle) the Kuznets infrastructural investment cycle of 15–25 years (after Simon Kuznets also called building cycle]) The Kondratiev wave or long technological cycle of 45–60 years (after Nikolai Kondratiev).

Background With globalization the economic activities are interconnected and booms and dips effect every part of the worlds with less or higher magnitude. Since 1930’s recession the world has faced five recessions. Four short terms and one that started in 2008 have extended up to 2013. To understand the problem one has to understand the basics of the Kitchen inventory cycle of 3–5 years (after Joseph Kitchen),the Jugular fixed investment cycle of 7–11 years (often identified as 'the' business cycle),the Kuznets infrastructural investment cycle of 15–25 years (after Simon Kuznets also called building cycle]),The Kondratiev wave or long technological cycle of 45–60 years (after Nikolai Kondratiev). The paper deals with understanding Business cycles dynamics i.e. better to understand the coming possible implications on macro indicators like countries as Pakistan in 7-11 years cycle

Methods and Procedures used in the paper Basically going through qualitative analysis and not using quantitative methods that provide only benchmarks. In this paper historical data has been used to predict about FY 2013-14

Business cycles in pakistan

Macro indicators 2008-2012 period 2008 2009 2010 2011 2012 World GDP growth % 3.1 -0.7 4.9 3.7 4.0 World CPI 5.6 2.7 4.8 Pakistan GDP growth 5.68 -1.6 3.8 3.5 Total investment growth 15.43 0.92 0.84 -4.7 -8.6 Discount rate 13 14 14.0 12.0 10.5 Average change in CPI 20.0 10.1 13.7 11.0 Direct Taxes Mn PKR 387.5 496.1 540.4 602 705,756 Indirect Taxes 621.9 755.4 942.6 955 981,228 Budget deficit % of GDP 8.3 4.2 4.7 6.6 8.5 Total export Mn USD 20,125 22,741 25,925 29,814 24.6 Total imports 35,411 38,952 37,004 37,744 40.0 Trade deficit (15,286) (16,211) (11,079) (7,930) (15.4) CA Balance -8.4 -9.3 -3.5 0.2 -4.6 USD-PKR Exchange rate USD/PKR 68.9294 82.062 85.2844 86.4450 94.8530

Marco indicators 2013-2014 period 2013 2014 World GDP growth % 3.5 4.0 World CPI 3.0 Pakistan GDP growth 3.7 4.7 Total investment growth -4.7 0.1 Discount rate 9.5 10.0 Average change in CPI 11.0 Direct Taxes Mn PKR 810,715 910.2 Indirect Taxes 1002,975 122,233 Budget deficit % of GDP 4.5 Total export Mn USD 25.8 25.2 Total imports 42.9 41.9 Trade deficit (17.1) (16.7) CA Balance -1.9 0.9 USD-PKR Exchange rate USD/PKR 99.0 96.2