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Economic Trends from Karachi Strategic Development 2020

 

Economic Base:

As the largest city and the transportation, trade, and financial gateway to the outside world, Karachi's economic fate is closely tied to that of the nation, and even that of Central Asia. Karachi's considerable presence can be portrayed best by showing the city's central role in various sectors of national economic activity:

. 40 percent of financial activity

. 30 percent of manufacturing and 40 percent of large-scale manufacturing 50 percent of bank deposits

. 20 percent of federal tax revenue, 40 percent of Sindh's provincial revenues, and 62 percent of income tax collected ~

. 95 percent of foreign trade passes through Karachi's two ports and its airport

§ It is estimated that the city generates about 20 percent of the national output, creates more than 30 percent of value added in manufacturing, and accounts for 25 percent of national tax revenues. More importantly, the city provides jobs for a large population - 40 percent of national employment in large-scale manufacturing is based in Karachi.

§ Karachi's economic hinterland extends to a much wider area, most of which is not under the administrative, management or planning jurisdiction of Karachi. Its economic underpinnings include industries in seven major concentrations, namely, the Sindh, Korangi and Landhi Industrial Estates, Federal 'B' Area, North Karachi, the Export Processing Zone, and Port Qasim. It also has three satellite concentrations of manufacturing industry at Gharo in the South East, Nooriabad straddling the Karachi-Hyderat;>ad Super Highway and the Hub Industrial Estate located in Balochistan which straddles the RCD Highway a few kilometres beyond the Hub River crossing. The city is peppered with small concentrations of small-scale and household manufacturing industries, most of which house one specific category of manufacturing industry or specialised service.

 

§ The labor participation rate of urban Sindh - largely Karachi - is 39 percent (68.5 percent for males). Many unemployed males are students enrolled in colleges, universities, and professional and technical education institutes. The rate of employment in electricity, gas and water, construction, manufacturing, trade (including restaurants and hotels) in urban Sindh are much higher than in the nation. Urban Sindh's participation in finance is almost double the national rate.

Karachi Port is an anchor of the

§ Waterways and on government owned land in pockets throughout the urbanized area. Many poor people work near where they live, which reduces commuting costs and helps keep wages low.

§ Inflation in Karachi is the lowest among all of the large cities (population in excess of 500,000) in Pakistan with the exclusion of Faisalabad. Between the low inflation and the availability of relatively low-cost housing near employment areas, Karachi is known in Pakistan as a poor-friendly city.

§ As access to the data on Karachi's economy from the Economic Census of Pakistan 2005 was denied, the consultant had to use an alternative methodology for estimating the long-term growth rates. This is based on discussions held with the officials of the Government of Sindh, the World Bank team engaged in preparing the Economic Report of Sindh, trade and industry leaders and civil society, regarding their perception of the movements in Karachi's economic form and fabric.

 

ECONOMIC BASE

Composition of Karachi’s Economy 1984/85 – 2006/07

(Rupees billions at 1959-60 factor cost)

Sector	Value Added 1984/85	Share in GRP 1984/85	Long-term Growth Rate		Value Added 2006/07		Share in GRP 2006/07
			A	B	A	B	A	B
Gross Regional Product	13.7				52.6	61.8
Primary Sectors*	0.2	1.34%	3.3%	3.3%	0.4	0.4	0.7%	0.6%
Secondary Sectors**	5.1	37.4%	6.7%	3.5%	21.4	10.9	40.6%	17.7%
Tertiary Sectors***	8.4	61.2%	6.1%	8.5%	30.9	50.5	58.7%	81.7%

Notes:

“A” is on Bengali (1988)

“B” is on consultant’s estimate based on discussions with Govt. Sindh and World Bank

*Agriculture, Forestry, Fisheries and Livestock; Mining and Quarrying

** Manufacturing; Construction; Electricity and Gas Distribution

*** Transport, Storage and Communications; Wholesale and Retail Trade; Ownership of Dwelling; Banking and Insurance; Public Administration and defence; Professional, Social and Community Services

(Source: Karachi Strategic Development Plan 2020: CDGK – 2007)