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CCC-plus from B, just several notches above a level that would indicate default.Pakistan¶s local currency debt rating was lowered to B-minus from BB-minus. Creditagency Moody¶s Investors Service cut its outlook on Pakistan¶s debt to negative fromstable due to political uncertainty, though it maintained the country¶s rating at B2.Thecost of protection against a default in Pakistan¶s sovereign debt trades at 1,800 basis points, according to its five year credit default swap, a level that indicates investors believe the country is already in or will soon be in default.The middle term however may be less turbulent, depending on the political environment.The EIU estimates that inflation should drop back to single digits in 2010, and thatgrowth should pick up to over 5% per annum by 2011. Although less than the previous 5year average of 7%, it would represent a overcoming of the present crisis wherein growthis a mere 3.5-4%.
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Economic history
First five decades
This is a chart of trend of gross domestic product of Pakistan at market prices estimated
[9]
by the International Monetary Fund with figures in millions of Pakistani Rupees. See also[2]

YearGross DomesticProductUS Dollar ExchangeInflationIndex(2000=100)Per CapitaIncome(as % of USA)
1960 20,0584.76 PakistaniRupees3.371965 31,7404.76 PakistaniRupees3.401970 51,3554.76 PakistaniRupees3.261975 131,3309.91 Pakistani2.36

Rupees1980 283,4609.97 PakistaniRupees21 2.831985 569,11416.28 PakistaniRupees30 2.071990 1,029,09321.41 PakistaniRupees41 1.921995 2,268,46130.62 PakistaniRupees68 2.162000 3,826,11151.64 PakistaniRupees100 1.542005 6,581,10360.40 PakistaniRupees126 1.71Pakistan was a very poor and predominantly agricultural country when it gainedindependence in 1947 from Britain. Pakistan's average economic growth rate sinceindependence has been higher than the average growth rate of the world economy duringthe period. Averageannual real GDP growth rateswere 6.8% in the 1960s, 4.8% in the1970s, and 6.5% in the 1980s. Average annual growth fell to 4.6% in the 1990s withsignificantly lower growth in the second half of that decade.Industrial-sector growth, including manufacturing, was also above average. In the late1960s Pakistan was seen as a model of economic development around the world, andthere was much praise for its economic progression. Later, economic mismanagement ingeneral, and fiscally imprudent economic policies in particular, caused a large increase inthe country's public debt and led to slower growth in the 1990s. Two wars with India inSecond Kashmir War 1965 and Bangladesh Liberation War 1971 and separation of Bangladesh adversely affected economic growth.
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In particular, the latter war broughtthe economy close to recession, although economic output rebounded sharply until thenationalizationsof the mid-1970s. The economy recovered during the 1980s via a policyof deregulation, as well as an increased inflow of foreign aid and remittances fromexpatriate workers.

Economic resilience
GDP Rate of Growth 1951-2007Historically, Pakistan's overall economic output (GDP) has grown every year since a1951recession. Despite this record of sustained growth, Pakistan's economy had, until afew years ago, been characterized as unstable and highly vulnerable to external andinternalshocks. However, the economy proved to be unexpectedly resilient in the face of multiple adverse events concentrated into an eight-year period ²
y

theAsian financial crisis;
y

economic sanctions² according toColin Powell, Pakistan was "sanctioned to the eyeballs"
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;
y

lop recession;
y

severe rioting in the port city of Karachi;
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a severedrought² the worst in Pakistan's history, lasting about four years;
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heightened perceptions of risk as a result of military tensions with India ² withas many as 1 million troops on the border, and predictions of impending(potentially nuclear) war;
y

the military actions against militants in parts of the country;Despite these adverse events, Pakistan's economy kept growing, and economic growthaccelerated towards the end of this period. This resilience has led to a change in perceptions of the economy, with leading international institutions such as the IMF,World Bank, and the ADB praising Pakistan's performance in the face of adversity.Additional confirmation that the country's economy is not as weather-sensitive as had been previously perceived comes from a 2008 analysis that "examined 68 countries,quantifying their sensitivity to fluctuations in weather, using figures on GDP by industrysector and the sensitivity of particular sectors to given weather variables." The analysisfound that of the 68 countries, the "least weather-sensitive country was Pakistan."[3] [4] [5] Pakistan emerged as one of the best performers in the wake of the global financial crisis,even as a country waged a costly war against militants. Its domestically-driven economywas minimally affected and its banking sector boasted surplus liquidity while remaining unharmed

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