1. Group Members
Syed Taimur Ashfaq
Saba Saleem
Muhammad Faheem Akhtar
Saira Ali
Sagar
Sana Azmat

2. Gross Domestic Product(GDP)
It represents the total dollar value of
all goods and services produced over a
specific time period in a country.
According to:
Economic Survey of Pakistan 2013-14
GDP of Pakistan is 4.14%.
International Monetary Fund (IMF)
GDP of Pakistan is 3.3%.
Gross Domestic Product in Dollar is
236.6 Billion Economic Survey of
Pakistan.

3. Fluctuation In GDP
This report is about to analyzed, what are the major factors which
influence the GDP of Pakistan.?
what are the reasons of fluctuation in GDP?
Why it is not remain stable?

4. GDP and Inflation
A general increase in prices and fall in the purchasing value of money.
In recent years, most developed countries have attempted to sustain
an inflation rate of 2-3%.

5. Early Thoughts
Structuralisms
• They see inflation is playing
a positive role in economic
growth.
• market segmentation, and
disequilibria between
sectorial demands and
supplies.
• Land reform, tax changes is
main causes of inflation
Monetarists
• Monetarists approach says
that the inflation causes
due to unjustified expansion
both in government deficits
(financed for the most part
by increases in the money
supply) and in central bank
loans to the public and to
commercial as banks.
• It is short run and fast
process.

6. Economists Research on Inflation
First research according to this report is done by Symth (1992,1994,1995) who
examine that GDP and Inflation has negative relationship which is increase in
1% of inflation decrease .223% GDP.
Dornbush(1992) concluded that extreme high rate of inflation or extreme low
rate of inflation effect the GDP, which is also negative relationship.
Mallik & Choudhry (2001), Michacel Bruno and Willan Easterly ()1998),
Gregorio (1993) and Abdul Qayuum (2006) also says that there is negative
relationship between the inflation and GDP.

7. GDP and Interest Rate
The real interest rate is the rate of
interest an investor expects to
receive after allowing for inflation.
. If, for example, an investor were
able to lock in a 5% interest rate for
the coming year and anticipated
a 2% rise in prices, they would
expect to earn a real interest rate
of 3%.interest rate is decided by
State Bank of Pakistan.
Actual Previous Highest Lowest Dates Unit
Frequen
cy Lending
10.00 10.00 20.00 7.50 1992 -
2014
Percent Daily 14.00

8. According to Fry (1995) and Galbis (1995) In absence of
inflation there is positive relation between growth of GDP
and interest rate.
De Gregorio and Guldotti (1995) concluded that very low
value of real interest rate causes financial disturbance in the
economy that in turn reduces economic growth.
Economists Research on Interest rate

9. Real Exchange Rate
The real exchange rate is the purchasing power of a currency
relative to another at current exchange rates and prices.
Dollar Exchange Rate

10. Levy Yayati (2002) Galla and Bhalla (2007)
says that exchange rate also plays vital role
in growth of the economy but there is no
clear evidence of the exchange rate on the
GDP.
Rodrick research shows that there is
positive relation but the condition is that
he takes only the developing countries.
Conclusion
Exchange rate differ country to country.
Economists Research on Real
Exchange Rate

11. Relationship Of GDP with Economic
Factors
Model R R Square Adjusted
R Square
Std. Error of
the Estimate
1 .706(a) .498 .444 1.63517
GDP= A+B(Inflation)+C( Interest Rate)+D(Exchange Rate)
GDP= Dependent Variable.
Others= Independent Variable.
R=.706 shows that there is strong linear relationship
between variables.
R2=.444 shows that 44.4 % GDP explained by 3 observed
independent variable and remaining 55.6% is explained
by other variables, political stability, exports imports,
government consumption etc. . .
Regression Analysis

12. F. Test
Model Sum of
Squares
Df Mean
squar
es
F Sig.
1. Regression
Residual
Total
74.207
74.86
149.073
3
28
31
24.73
6
2.674
9.251 .000(a)
In F-test 9.251 shows that data is significant. It is for all the variables
In T-test all separately values also same the above F test that data is
significant.
T. Test
Model Unstandardized
coefficients
Standardiz
ed
Coefficient
s
T Sig.
B Std. Error
1 constant
Inflation
Interest
exchange
3.574
-.213
-.383
.025
1.342
.091
.12
.007
-.390
.524
.492
2.663
-2.354
-3.184
.492
.013
.026
.004
.001

13. Effect of Variables on GDP of Pakistan
Inflation 1% change in inflation effect 39% GDP of PAK. / others
thing remain same
Interest
Rate
1% change in interest effect 49.2% GDP of PAK /others
thing remain same
Exchange
Rate
1% change in Exchange effect 52.4% GDP / others things
remain same
Effects of variable In Pakistan Economy
Inflation There is –Ve Relationships with GDP
Interest
Rate
There is –Ve Relationships with GDP which varies from
country to country.
Exchange
Rate
There is +Ve Relationship with GDP which varies from
country to country.

14. Recommendations
Inflation
Central Bank Must lower the printing of money.
Tight monetary policy should be introduced by central
bank of Pakistan to control inflation.
Soaking up cash by selling government bonds.
Raising the banks' reserve requirements and rising
interest rate.
Interest
Rate
Interest rate should be suitable to produce deposits
which directly accomplish the requirement of
investments and therefor people have the chance to
save their money with the bank instead of investing
anywhere else.
Exchange
Rate
High exchange rate should be maintained in order to
boost the economic growth