1.1 OVERVIEW:
The topic of this research is relationship between inflation rate and GDP growth of Pakistan. Nowadays in Pakistan inflation rate is high, when inflation crosses logical limits, it has negative effects on GDP growth. It drops the value of money, resulting in uncertainty of the value of profit & loss of borrowers, lenders, buyers and sellers. The rising the uncertainty in saving and investment. In Feb 2009 CPI Inflation rate of Pakistan was 22.97% and GDP was 5.8%. GDP and inflation rate negative correlation present even when other factors are included to the study and the investment rate, population of growth, and the constant advances in technology and still when the factor in the effects of supply shocks features of a part of the observed period
1.2 PROBLEM STATEMENT:
In this research determine how much rate of inflation affect the GDP growth of Pakistan. In this research also determine inflation rate significantly affect the GDP growth of Pakistan. GDP shows the economic performance of a country so it is of most importance for concerned departments and economists of that country. On the other hand rising inflation can impact negatively on GDP and the objectives that a country achieves can be demolished by rising inflation.
1.3 SIGNIFICANCE OF RESEARCH:
If GDP growing fast and rate of inflation is falling down, it is good for the economy. More money comes in Pakistan and financer invests more and more capital. GDP indicates all sectors such as agriculture, telecommunication, services, manufacturing and Per Capita Income. These all indicators represent the country's economy. If these sectors were growing fast, country's economy also grows faster.
Foreign investors observe the market condition of Pakistan and foreign investors must see the GDP & Inflation Rate of Pakistan. If the GDP growing faster and inflation going down, foreign investors invest more money into Pakistan. If GDP is growing faster, the investor earns more money and achieves good profit and aspires to keep doing business for long term and expects less risk for the loss. Investors also expect for greater dividend in real terms, if rate of inflation is dropping down.
This research is also significant for foreign investor and domestic investor of stock market. If inflation is increasing, investors invest less in market because investors do not expect good profit and dividend for the shares and also expect huge risk in market for long term. If any country's inflation rate is increasing, it is very difficult for financial institution to maintain the trust of investors because there is a chance of loss for the investors.
This research is also significant for exporters. Exporters must see the inflation and GDP of Pakistan. If inflation is increasing, exporters export fewer goods because goods are expensive for exporters due to high inflation. Exporters export more goods, when inflation is low because goods are affordable for exporters and easy to export goods.
This research is also significant for fresh graduate students. If inflation is high, there is less chance of jobs because the rate of unemployment is also high due to inflation rate. Fresh graduate also do not start business because it is carries more risk and there is chance waste of capital.
1.4 HYPOTHESES:
H1: There is a negatively relationship between the Inflation rate and economic growth of Pakistan.
H2: Inflation rate significantly effect on economic growth rate of Pakistan.
1.5 SUMMARY OF RESEARCH:
The overall summary of this research defined in the following parts:
First chapter is Introduction. In this part describe overview of all research, research problem, hypotheses of this research and definitions used in this research.
Literature Review is second chapter. Describe summary of all articles, which related to this research.
Third Chapter is Research Method. In this part describe data collection method, how sample size of this research and also describe technique of this research.
Fourth Chapter
