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| | GEO Pakistan | | UN report forecasts economic growth of 3.2 percent | Updated at: 1941 PST, Thursday, May 06, 2010
ISLAMABAD: The United Nations in its annual report 'Economic and Social Survey of Asia and Pacific' forecasted Pakistan's economic growth at 3.2 per cent during the current financial year.
The survey, an annual publication of Economic and Social Commission on Asia and Pacific (ESCAP) was launched on Thursday in different countries including in Pakistan by former Advisor to Finance Ministry and Director General NUST Business School, Dr. Ashfaq Hassan Khan here on Thursday.
The report said that Pakistan's real GDP would grow at 3.2 percent in 2009-10 against the growth of 2.0 in 2008-09 and 4.1 percent in 2007-08.
The survey report has projected country's inflation at 12 percent during the current financial year against the inflation of 20.8 percent last year and 12 percent in 2007-08, showing a large decrease as compared to the inflation last year.
Regarding savings and investments, ESCAP has forecasted country's gross savings growth at 15.1 percent against 14.4 percent in 2008-09 and 13.4 percent in 2007-08.
On the other hand, the gross investments would grow at 18.5 percent during the year against 19.8 during last year and 21.6 percent during 2007-08, it predicted.
The survey said that Pakistan's economy has been affected not just by the global economic crisis but also by the declining security situation and intensification of conflict linked to terrorism.
The industry, especially large-scale manufacturing suffered the worst due to drop in international demand while also having to cope with acute shortages of electricity.
Improved performance of the service sector offset it to some extent, which grew 3.6 percent during the year, it said adding that a rebound was witnessed in agriculture due to bumper wheat crop.
The report says that anticipated recovery is expected to be supported by the restocking of inventories and a small recovery in exports as the incipient recovery in major economies gather pace.
The large-scale manufacturing sector, which contracted in 2009, is projected to register positive growth during this year.
The report says that Pakistan witnessed a contraction in both of its exports and imports adding that global economic crisis led to a decline in exports by 6 percent while imports contracted at a much faster rate by 11 per cent due to lower domestic demand coupled with massive fall in international oil prices.
Depreciation of domestic currency also played a role in containing imports.
According to the report, strong growth momentum in the workers' remittances continued in 2009 and with over 20 per cent increase the remittances stood at $7.8 billion.
All these developments helped in bringing significant improvement in the current account balance, where deficit of 8.4 per cent of GDP in 2008 was reduced to 5.3 of GDP in 2009.
However, it said that due to global economic slowdown and political and security uncertainties, there was a slackening of capital inflows due o lower FDI inflows, higher portfolio outflows, lower disbursements of loan and higher amortization payments.
The report said that the fiscal deficit has been rising in recent year, which stood at 7.6 percent of GDP in 2008.
The report said that the fiscal performance improved substantially in 2009 due to more stringent fiscal policy while the budget deficit came down to 5.2 per cent of GDP.
It said that performance at revenue side was not very encouraging adding that the government needs to improve tax base and raise the very low tax-to-GDP ration in order to reduce the fiscal deficit to sustainable levels.
The report said that a sustained high and inclusive economic growth was needed for rapid poverty reduction.
Speaking on the occasion, Dr. Ashfaq Hassan said that the recent global economic crisis has given a clear message that there was a need to strike a balance between consumer-based economy and export oriented economy to ensure robust economic growth.
He said that the Asia Pacific became the victim of global financial crisis as countries in this region were having export oriented economic.
He also stressed the need for reducing the fiscal deficit, which would enable government not to borrow money from domestic or international sources and in the long run would help develop sustainable economy.
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