Business Cycles in Pakistan
Tahir Mahmood, Muhammad Farooq Arby

Abstract
Gross domestic product, like any other time series, may be considered a combination of four processes, viz. long-run trend, business cycles, seasonal variations and short-run shocks. The series of GDP can be decomposed in to these components by using some statistical method. Such a decomposition of annual real GDP of Pakistan reveals that the Pakistan’s economy has completed three business cycles and is currently under a recessionary phase of fourth business cycle. The current recessionary phase is expected to bottom out in 2012 after which a recovery would start. It is also expected that overall real GDP growth would remain around three percent during the next five years.

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