Review of Economic Situation 2008-09: ‘External account remains vulnerable’: Daily Times

By Sajid Chaudhry

ISLAMABAD: The Ministry of Finance (MoF) said on Monday the fiscal deficit target of 4.3 percent of GDP and the current account deficit target of 5.9 percent of GDP were achievable.

However, recent global financial crisis and extremely vulnerable security environment added risks to the economy. The external sector data for the last quarter (April-June 2009) would give a real reflection of the impact of global financial crisis on Pakistan’s external sector.

In a report on July-March period of 2008-09, MoF stated that the global economic slowdown was making inroads into real economy through contraction in demand in the export sector and as well as shrinkage of external inflows. Pakistan’s economy continues to remain exposed to the vagaries of international developments as well as internal security environment, it said. Despite support from the IMF and other bilateral and multilateral donors, Pakistan’s external account remains exposed to a host of uncertainties, it said.

The outlook for economic growth remained pessimistic as import demand shriveled, tax collection declined, and inflows of foreign investment and privatization dampened.

Real Sector: Notwith-standing the vulnerabilities, the economy is set to post economic growth in the range of 2.5 percent to 3.5 percent, far lower than its historical average, but relatively satisfactory in the given international environment. The real GDP growth outlook drew strength from positive outlook of the agriculture sector, which has given all indications of a healthy growth. The outlook is based upon anticipated high wheat crop and above target growth of minor crops and reasonably good outturn by the livestock sub-sector.

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