NAME:ARIF USMAN

STUDENT ID. :16020

PROGRAM:MBA (MHM)

SUBJECT:MICRO AND MACRO ECONOMICS

INSTRUCTOR:

NEWS # 1: Manufacturing share in GDP slipsISLAMABAD: The share of manufacturing in GDP has witnessed a slight decline in the last five years. This was stated by Federal Minister for Industries Ghulam Murtaza Khan Jatoi in a written reply to a question of Senator Mrs Nuzhat Sadiq.The minister said that his government is combating the ongoing energy crisis through allocating more resources for energy supply; imparting expertise through volunteer experts from abroad. The share of manufacturing sector in GDP was 13.8 per cent in 2009 which fell to 13.2pc in the year 2013.Jatoi said the share of manufacturing in GDP in China and Bangladesh has remained constant, while in Pakistan and India there has been a slight decrease. However, he admitted that no specific study in manufacturing sector has been carried out in the recent past.

NEWS # 2: Pakistan Steel paid two months salaryKARACHI: Pakistan Steel Mills (PSM) has given salaries of two months (February and March) to all its employees after release of Rs4.2 billion from the Ministry of Finance.Around Rs960 million was spent in clearing two-month salaries of 15,600 employees. The Rs4.2bn is the first tranche of the restructuring package of Rs18.5bn approved by the government.Two letters of credit (LCs) to procure coking coal each of 55,000 metric tons amounting to Rs1.5bn have also been opened from this amount. The coal would be imported from Australia.The remaining amount will be utilised to pay utility bills, capital repairs and to disburse payment to suppliers. Spokesman for the PSM, Shazim Akhtar, said the mills management hoped that production would improve after the release of the first tranche.The Steel Mills is facing a deficit of Rs115bn and currently production hovers around three to five per cent.

NEWS # 3 : Tax-to-GDP ratio downISLAMABAD: The budget strategy paper for 2014-17 presented to the federal cabinet by Finance Minister Ishaq Dar sets ambitious targets for reduction of debt build-up and fiscal deficit, but concedes that the tax-to-GDP ratio has declined during the current year despite an increase in tax rates.According to sources, the minister informed the cabinet on Thursday that even though tax collection had improved by more than 15 per cent during this year, the tax-to-GDP ratio had dropped significantly.The government had set a target to achieve the ratio of 10.9pc this year, which has now been brought down to 10.5pc on the basis of the collection in the first 10 months and projected collection in the remaining six weeks.This was despite the fact that the general sales tax on all products and services was increased by 1pc by Mr Dar in his first budget speech and withholding tax was also imposed on seven key sectors.A number of measures for documentation of economy to broaden the tax base and increase the tax-to-GDP ratio announced in the budget were gradually withdrawn over the course of the fiscal year.The strategy paper projected the ratio to grow to 11.3pc by the end of the next fiscal year, followed by 12pc in 2015-16 and reaching up to 12.7pc in 2016-17.The government has set a target of 5.5pc GDP growth in 2014-15 which will be increased to 7pc and 7.2pc for the next two years.It was reported that the GDP growth rate this year was estimated at 4.14pc against a target of 4.4pc.The document projected the public debt-to-GDP ratio at 60.2pc at the end of the current fiscal year, lower than the 61.3pc budget target. The target is to reduce public debt to 56.7pc of GDP in 2014-15, 53.2pc in 2015-16 and 49.8pc in 2016-17.The foreign exchange reserves were $13.9 billion on May 13 and will increase to $19bn by the end of the next fiscal year, $22bn in 2015-16 and $22.5bn by 2016-17.The budget paper put the current years investment-GDP ratio at 13.5pc and set a target of 16.5pc for the next year, 20.2pc by 2015-16 and 21pc by 2016-17.The cabinet was informed that the inflation rate was expected to settle down at 8.5pc this year against a target of 8pc, but would remain stable at the same level during the next three years. The government expects to achieve a consolidated fiscal deficit level of 5.7pc of GDP this year against the budget target of 6.3pc. The figure will be brought down to 4.8pc next year and stabilised at 4pc over the subsequent two fiscal years.DEFINITIONS OF GDP, INFLATION AND UNEMPLOYMENT:1. GDP:The total market value of all final goods and services produced in a country in a given year, equal to total consumer, investment and government spending, plus the value of exports, minus the value of imports.The monetary value of all the finished goods and services produced within a country's borders in a specific time period, though GDP is usually calculated on an annual basis. It includes all of private and public consumption, government outlays, investments and exports less imports that occur within a defined territory.GDP = C + G + I + NXwhere:"C" is equal to all private consumption, or consumer spending, in a nation's economy"G" is the sum of government spending"I" is the sum of all the country's businesses spending on capital"NX" is the nation's total net exports, calculated as total exports minus total imports. (NX = Exports - Imports)GDP Reporting:The GDP report is released at 8:30 am EST on the last day of each quarter and reflects the previous quarter. Growth in GDP is what matters, and the U.S. GDP growth has historically averaged about 2.5-3% per year but with substantial deviations. Each initial GDP report will be revised twice before the final figure is settled upon: the "advance report" is followed by the "preliminary report" about a month later and a final report a month after that. Significant revisions to the advance number can cause additional ripples through the markets.

2. UNEMPLOYMENT:Unemployment is defined as a situation where someone of working age is not able to get a job but would like to be in full time employment.Note: If a Mother left work to bring up a child or if someone went into higher education, they are not working but would not be classed as unemployed as they are not actively seeking employment.One grey area is voluntary unemployment. This occurs when the unemployed choose not to take a job, the going wage rate (e.g. wrong job, benefits too high etc.) They could be counted as unemployed because they are still seeking a job (they just dont want to take one they are offered.Measuring Unemployment:Unemployment in the UK Is measured in two ways1. Claimant Count number of people eligible for Job Seekers Allowance (note people may be viewed as unemployed but not eligible for benefits)2. Labor Force Survey A survey asking people whether they are out of work and actively seeking work.

Types of UnemploymentUnemployment Types Demand Deficient Unemployment. Lack of AD in economy (e.g. Recession) Structural Unemployment workers lack necessary skills or geographical immobility Real Wage Unemployment wages above equilibrium Frictional unemployment workers in between jobs Voluntary Unemployment. workers prefer not to work

Demand Deficient Unemployment:Demand deficient unemployment occurs in a recession or period of very low growth. If there is insufficient Aggregate Demand, firms will cut back on output. Structural Unemployment: This is unemployment due to inefficiencies in the labour market. It may occur due to a mismatch of skills or geographical location.

Real Wage Unemployment / Classical Unemployment:This occurs when wages are artificially kept above the equilibrium. For example, powerful trades unions or minimum wages could lead to wages above the equilibrium leading to excess supply of labour (this assumes labour markets are competitive) Keynesian analysis suggests a fall in AD can lead to real wage unemployment as wages are sticky downwards and a fall in AD doesnt lead to wages clearing.

Frictional unemployment: This occurs when workers are in between jobs e.g. school leavers take time to find work. Voluntary Unemployment: This occurs when workers choose not to take a job at the going wage rate.

3. INFLATION:The rate at which the general level of prices for goods and services is rising, and, subsequently, purchasing power is falling. Central banks attempt to stop severe inflation, along with severe deflation, in an attempt to keep the excessive growth of prices to a minimum.

Pakistan GDP:The Gross Domestic Product (GDP) in Pakistan was worth 231 billion US dollars in 2012. The GDP value of Pakistan represents 0.37 percent of the world economy. GDP in Pakistan averaged 52.29 USD Billion from 1960 until 2012, reaching an all-time high of 231 USD Billion in 2012 and a record low of 3.70 USD Billion in 1960. GDP in Pakistan is reported by the World Bank Group.

ActualPreviousHighestLowestDatesUnitFrequency

231.00211.00231.003.701960 - 2012USD BillionYearly

The gross domestic product (GDP) measures of national income and output for a given country's economy. The gross domestic product (GDP) is equal to the total expenditures for all final goods and services produced within the country in a stipulated period of time. This page provides - Pakistan GDP - actual values, historical data, forecast, chart, statistics, economic calendar and news.

Pakistan GDP Growth Rate:The Gross Domestic Product (GDP) in Pakistan expanded 3.59 percent in 2013 from the previous year. GDP Growth Rate in Pakistan averaged 4.94 Percent from 1952 until 2013, reaching an all time high of 10.22 Percent in 1954 and a record low of -1.80 Percent in 1952. GDP Growth Rate in Pakistan is reported by the Pakistan Bureau of Statistics.

ActualPreviousHighestLowestDatesUnitFrequency

3.594.3610.22-1.801952 - 2013PercentYearly

Pakistan is one of the poorest and least developed countries in Asia. Pakistan has a growing semi-industrialized economy that relies on manufacturing, agriculture and remittances. Although since 2005 the GDP has been growing an average 5 percent a year, it is not enough to keep up with fast population growth. To make things even worst, political instability, widespread corruption and lack of law enforcement hamper private investment and foreign aid. This page provides - Pakistan GDP Growth Rate - actual values, historical data, forecast, chart, statistics, economic calendar and news.

Pakistan Unemployment Rate:Unemployment Rate in Pakistan decreased to 6 percent in the second quarter of 2013 from 6.30 percent in the first quarter of 2013. Unemployment Rate in Pakistan averaged 5.43 Percent from 1985 until 2013, reaching an all time high of 7.80 Percent in the second quarter of 2002 and a record low of 3.10 Percent in the fourth quarter of 1987. Unemployment Rate in Pakistan is reported by the Pakistan Bureau of Statistics.

ActualPreviousHighestLowestDatesUnitFrequency

6.006.307.803.101985 - 2013PercentQuarterly

In Pakistan, the unemployment rate measures the number of people actively looking for a job as a percentage of the labour force. This page provides - Pakistan Unemployment Rate - actual values, historical data, forecast, chart, statistics, economic calendar and news.

Pakistan Inflation Rate:The inflation rate in Pakistan was recorded at 9.18 percent in April of 2014. Inflation Rate in Pakistan averaged 8.04 Percent from 1957 until 2014, reaching an all time high of 37.81 Percent in December of 1973 and a record low of -10.32 Percent in February of 1959. Inflation Rate in Pakistan is reported by the Pakistan Bureau of Statistics.

ActualPreviousHighestLowestDatesUnitFrequency

9.188.5337.81-10.321957 - 2014PercentMonthly2007/2008=100

In Pakistan, most important categories in the consumer price index are food and non-alcoholic beverages (35 percent of total weight); housing, water, electricity, gas and fuels (29 percent); clothing and footwear (8 percent) and transport (7 percent). The index also includes furnishings and household equipment (4 percent), education (4 percent), communication (3 percent) and health (2 percent). The remaining 8 percent is composed by: recreation and culture, restaurants and hotels, alcoholic beverages and tobacco and other goods and services. This page provides - Pakistan Inflation Rate - actual values, historical data, forecast, chart, statistics, economic calendar and news.

REFERENCES: http://www.tradingeconomics.com/pakistan/inflation-cpi http://www.indexmundi.com/pakistan/unemployment_rate.html http://www.indexmundi.com/pakistan/gdp_real_growth_rate.html