Natural catastrophes have shown up the depth of poverty in Pakistan
After the flood
THREE TIMES IN recent years Pakistan has suffered from cataclysmic disasters. The earthquake that struck Kashmir in October 2005 killed over 70,000 people and made 3m homeless. In 2010 the Indus river spilled over its banks, flooding one-fifth of the country and affecting 20m people. More than 1,700 people lost their lives. The following year unusually heavy rains—one monsoon’s-worth in a day—brought renewed flooding in Sindh and Balochistan. Of the inundated area, 35% had also been flooded the year before. Over 5m people were affected.
On each occasion appeals for emergency aid were launched, but by 2011 the response was tepid. That may have been because there were so many competing disasters elsewhere, or because the world was weary of Pakistan’s woes. But it also reflected some donors’ exasperation with the government’s handling of the crisis.
The economic impact of these disasters was not as great as might be expected. In 2005, the earthquake year, Pakistan’s GDP grew by 7.7%, one of its best-ever performances. The floods in 2010 and 2011 had a big impact on people’s lives, but again did not dent overall growth that much. In 2010, according to the State Bank, 6.6m workers were unemployed for two to three months and capital stock worth $2.6 billion, or 1.2% of GDP, was destroyed. But agriculture recovered remarkably quickly, with a bumper winter-wheat crop; and, buoyed by the high cotton price, so did textile exports, despite the waterlogging. The ministry of finance estimated that the huge but somewhat less catastrophic floods in 2011 would shave just 0.5 percentage points off growth for the fiscal year ending in June 2012.
The relatively small macroeconomic impact of these disasters reflects the extraordinary resilience of rural Pakistan. It is also a tribute to the international aid effort and to the work of the army and Pakistani charities. One factor mitigating the government’s desperately low tax take is that Pakistan has one of the highest rates of private charitable donations in the world—almost 5% of GDP.
For all the criticism, the government has also brought in some admired relief measures, in particular its system for providing direct cash payments to flood-affected households (virtually none of which has a bank account). Families are issued with smart, machine-readable “Watan” cards issued by the big banks that allow holders to collect cash from branches or local agents. Some 1.7m of these were issued after the 2010 floods. Although impressed with the scheme, one foreign aid professional nevertheless describes it as “palliative care for a bad macro-economy”.
Indeed, the main reason that the disasters seem to have such a limited effect on growth is that the people they hit are mostly so poor that the loss of their production has no impact on GDP. Most are among the roughly two-thirds of the population who live in the countryside and depend on agriculture, which contributes about one-fifth of GDP. Besides the natural disasters they have also had to cope with high inflation: food prices rose by about 10% in the year to last November.
According to the Asian Development Bank, the proportion of Pakistan’s population living on less than $2 a day (adjusted for purchasing power) has fallen from 83% in 1996 to about 60% now. But in 2007 the bank also found that Bangladesh and Pakistan were the only countries in Asia where the poorest fifth of the population were worse off than they had been a decade earlier.
Foreign aid workers administering flood relief have been shocked by the high levels of malnutrition they found. One calls it “the other emergency”. According to figures from UNICEF, 44% of Pakistani children are suffering from chronic malnutrition, including 15% who are acutely malnourished.
This is partly to do with feeding practices. Only 37% of Pakistani babies are exclusively breastfed. But a national survey also found that 58% of households were “food insecure” and 30% were suffering moderate or severe hunger. In flood-affected areas the numbers were even worse, with 18% of children “acutely” malnourished and 7% suffering “severe acute malnutrition”.
Given the effect of malnutrition on children’s development, it is perhaps not surprising that Pakistan is further down the United Nations league table of human-development indicators (145th out of 187 countries) than that of GDP per head (138th). That, too, is an emergency of a sort.