Pakistan 2009 growth will be slowest in decade: AFP

KARACHI (AFP) — Pakistan's economic growth for the fiscal year ending June 30 will be the slowest in more than a decade, beset by the global recession and a manufacturing slump, officials and analysts say.

Gross domestic product (GDP) will slow to 2.37 percent, Pakistan's National Accounts Committee recently estimated, revising downwards the year's target growth of 2.5 percent.

But a senior finance ministry official warned GDP could be as little as 2.1 percent, saying the committee did not take into account the plummeting fortunes of the manufacturing sector.

"The accounts committee will calculate it again while considering the manufacturing sector's growth and all other things," the official told AFP on condition of anonymity because he was not authorised to speak to the media.

Either way, it will be the worst recorded GDP growth since financial year 1997-98 when the State Bank of Pakistan put the rate at 1.9 percent.

The bleak economic news comes with the military bogged down in an offensive against the Taliban in the country's northwest, under huge US pressure to crush militants whom Washington has branded the greatest terror threat to the West.

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Economy on way to revival: Ishrat: The News

KARACHI: Former Governor State Bank of Pakistan and Dean and Director Institute of Business Administration, Dr Ishrat Hussain has said that Pakistan is now on moving towards economic revival as recent indicators have shown easing of the crisis that the country was facing.

Pakistan France Business Alliance, the representative forum of Pakistani and French companies, organised the 5th Pakistan-France Trade Performance Awards 2006-07 to recognise and honour leading Pakistani manufacturers and exporters and importers from France here on Friday night.

Hussain said that the economic crisis in Pakistan was not due to the global recession instead it was the steep rise in inflation that had crippled the nation.

He further voiced that rising oil prices had fuelled the inflation in the country. A single barrel had risen from $50 to $150 threatening the country with hyperinflation.

The dean stated that the financial situation of Pakistan was far worst than 70s and 80s and the IMF aid was essential to control the dwindling economy. He further held that even on the international front, the global economy’s GDP this year was the worst in recent history.

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GDP growth to be less than 2%: Salman Shah: Daily Times

LAHORE: Pakistan’s GDP growth would be less than 2 percent, lowest in past one decade, as the growth has been strangulated by the irrational tight monetary policy stance of the State Bank of Pakistan.

Former Adviser for Finance, Dr Salman Shah stated this while speaking at a discussion on economic decline and remedial measures. The discussion was organised by Lahore Economic Journalists Association. President Mansoor Ahmad, Vice President Itrat Bashir, Geral Secretary Sudhir Chaudhry And Finance Secretary Imran Adnan were also present.

Elaborating his point, he said the sensitive price index has been on constant decline since October 2008 and there is no justification in keeping the central bank policy rate at 15 percent that has trifled growth. Dr Shah claimed that based on current inflation scenario, the KIBOR should not be more than two percent and the policy rate of the State Bank of Pakistan should be around 9 to 9.5 percent. He said after accounting for 3 to 5 percent banking margins the industry would get credit at 13 to 14 percent. He said even this interest is high but the productive sector would be able to grow. He said the current high interest rates have marginalised the manufacturing sector of the country. “No industry could grow if it gets credit at 20 percent” he added.

He said more that 54 percent of Pakistani population is under the age of 25 and every year about 4 million of them join the adult workforce. “Pakistan needs to grow at 9 to 10 He said the economic managers of previous regime knew that the high oil prices would put pressure on foreign exchange reserves.

In order to counter this spike in oil prices, we handed over the road map to the government elected last year. He said the plan was to offload small percentage of public sector companies like National Banks, KAPCO etc in the London Stock Exchange in April 2009. He said at that time the stock market was at its peak of 15,800 points and the share prices of these companies were very high. He said government would have obtained $4 to $5 billion from these transactions. He regretted that the new government scrapped the programme.

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Pakistan expected to get $750m IMF loan in March: Daily Times

By Sajid Chaudhry

ISLAMABAD: Pakistan is likely to receive a $750 million loan from the International Monetary Fund (IMF) by the end of March, after the successful completion of the first review of the two parties’ standby agreement.

Sources in the Finance Ministry told Daily Times the first review of the standby agreement with the IMF would be conducted in Dubai between February 14 and 24.

They said the key performance benchmark was a budget deficit at or below 4.2 percent of the Gross Domestic Product (GDP) during the current fiscal year.

The other important benchmark, they added, was to maintain State Bank borrowing at Rs 258 billion at the end of each quarter.

They said Pakistan’s budget deficit had been estimated at around two percent of the GDP, much less than the target agreed upon with the IMF. Similarly, they added, the State Bank borrowing had been maintained at the agreed upon level so both conditions had been met successfully.

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Stopping the rot: Economist

Just like the bad old days

BRIGHTLY painted Tata lorries, laden with sacks of onions, wait in the noon heat at the Wagah border post between India and Pakistan. Once past customs, the onions will go on to Lahore and beyond. But the lorries must turn back. Their produce is laboriously loaded onto smaller vans, driven by locals.

Pakistan's costly imports of food ($3.5 billion in the first ten months of this fiscal year, which ends on June 30th), fertiliser ($823m) and fuel (over $8.6 billion) may pull the economic rug from under its newly installed government, which presented its first budget, belatedly, on June 11th. The State Bank of Pakistan (SBP), the central bank, reckons the country's current-account deficit might reach 7.8% of GDP this fiscal year, its highest ever (see chart). Growth has slowed to 5.8%, inflation has quickened to over 19% and the government's budget deficit, at about 7% of GDP, is the highest in ten years.

Such macroeconomic disarray will be familiar to the coalition government led by the Pakistan People's Party of Asif Zardari, and to Nawaz Sharif, whose party provides it "outside support". Before Mr Sharif was ousted in 1999, the two parties had presided over a decade of corruption and mismanagement. But since then, as the IMF remarked in a report in January, there has been a transformation. Pakistan attracted over $5 billion in foreign direct investment in the 2006-07 fiscal year, ten times the figure of 2000-01. The government's debt fell from 68% of GDP in 2003-04 to less than 55% in 2006-07, and its foreign-exchange reserves reached $16.4 billion as recently as in October.

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Executive Summary of the Economic Survey of Pakistan 2007-2008: The News

Wednesday, June 11, 2008
ISLAMABAD: The government on Tuesday released the Economic Survey 2007-08. Following is the Executive Summary of the survey.

Growth and Investment

Pakistan’s economy has shown great resilience against internal and external shocks of very high intensity and grew robustly at 5.8 percent in 2007-08, as against 6.8 percent last year and this year’s target of 7.2 percent. The Commodity Producing Sector (CPS) registered a growth of 3.2 percent in 2007-08 as against 6.0 percent last year owing mainly to the lackluster performance of agriculture and manufacturing. While agriculture grew by 1.5 percent, the manufacturing sector posted a modest growth of 5.4 percent in 2007-08. The large scale manufacturing (LSM) sector witnessed a modest growth of 4.8 percent, down from 8.6 percent last year. The manufacturing sector has been hard hit by political instability, frequent eruptions of incidents detrimental to law and order and the acute energy shortages. In unison with increasing prices for fuel and energy, all these factors have caused slower growth in LSM. Growth in the small scale manufacturing sub-sector moderated to 7.5 percent in 2007-08 from 8.1 percent during 2006-07.

The poor show of the agriculture sector was the result of a sharp deceleration in the growth of the major crops sub-sector, which posted a negative growth of 3.0 percent in 2007-08 as against a healthy growth of 8.3 percent last year. Minor crops registered a growth of 4.9 percent as against the negative growth of 1.3 percent last year. Fishing and forestry exhibited robust growth of 3.8 percent and 11.0 percent, respectively.

The services sector has surpassed the growth target of 7.1 percent and grew by 8.2 percent in 2007-08 as against the actual achievement of 7.6 percent last year. The finance and insurance sector displayed a stellar growth performance of 17.0 percent during 2007-08 as against 15 percent last year. Value added in the wholesale and retail trade sector grew at 6.4 percent as compared to 5.4 percent last year and the target of 7.8 percent this year. The Transport, Storage and Communication sub-sector saw a deceleration in growth to 4.4 percent in 2007-08 as compared to 6.5 percent of last year.

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