Pakistan likely to exceed targeted 5.3 percent growth rate: ADB
* Exports grew by 13.1% in 6 months
* Substantial growth in agriculture and manufacturing
ISLAMABAD: Pakistan’s economic recovery gained momentum in the first half of the current fiscal year and was entering a “high growth path” that could exceed its target growth rate of 5.3 percent, the Asian Development Bank (ADB) said on Sunday.
“Strong revenue growth so far indicates that the revenue and fiscal targets for the current year should be easily achieved,” the ADB said in its latest quarterly report on Pakistan’s economy. It said the growth forecast had been raised to 5.5 percent.
“Robust growth in exports, which grew by 13.1 percent in the first half of the fiscal year 2003-04, as well as a high level of remittances point to a comfortable balance of payments position for the year. Thus the economy seems to be moving to a high growth path.”
It said the two main commodity-producing sectors — agriculture and large manufacturing — showed substantial improvement in the first half of the 2003-2004 financial year and the outlook for the second half to June 30 was good.d.
The initial estimates showed an increase in wheat cultivation area over last year. Growth in large scale manufacturing production in the first half of the fiscal year 2003-04, was almost three times the growth last year with more pronounced increases being in automobiles, electronics, leather products, cement and metal products.
The service sector looked set to record strong performance with robust growth in the financial sector, telecommunications, particularly cellular phone service and electronic media.
“With private sector credit growing rapidly, interest rates remaining at historically low level, and continuing double-digit growth in exports, this high growth in the large-scale manufacturing sector is expected to stay,” the report added.
As for prices, money and capital markets, the reports said inflation in the first half of the year was lower than in the corresponding period of last year. However it started to rise in October 2003. Despite an upturn in inflation, the State Bank of Pakistan continued its easy monetary policy in order to sustain the economic recovery. The broad money supply increased by 9.1 percent during the period compared with an expansion of 8.6 percent in the corresponding period of last year. It said that except for a decline in September and October 2003, share prices continued their rising trend through most of the first eight months of the current year.
The update said the fiscal deficit declined to 0.8 percent of GDP compared to 1.6 percent in the first half of the last year. Revenues increased by 13.9 percent, while expenditure increased by only 3.6 percent. The government was thus able to contain an increase in expenditure as interest payment on domestic debt and subsidies declined.
Despite an increase in international prices of petroleum, Pakistan’s oil import bill declined because of a reduction in the quantum imports of petroleum products. —Agencies