Pakistan's economy will expand by less than 6 percent for the first time in five years amid double-digit inflation and ballooning budget and trade deficits, local newspaper The Nation reported Sunday.
The 3rd quarterly report for the year 2007-08 released by the State Bank of Pakistan (SBP) on Saturday said that the GDP growth in fiscal year 2008 is expected to be in the range between 5.5 percent and 6 percent, well below the targeted 7.2 percent.
At the same time, the inflation will remain in the double-digit touching 11 to 12 percent. On the fiscal side, the current account balance is most likely to witness negative growth of -7.3 percent to -7.8 percent against the original -4 percent target of total GDP. While on the external front, SBP forecasts 19.9 billion U.S. dollars amount of capital to raise in the form of foreign exchange from export trade and to spend 39 billion U.S. dollars on import of various goods and services respectively.
Productivity improvements can also be important in containing domestic inflation which is already a serious policy concern for Pakistan, with CPI inflation at 17.2 percent year-on-year for April 2008, the highest level in a month since April 1995.
The government has to urgently address the growth of the fiscal deficit as well as to diversify its financing away from the central bank. The SBP assessment indicates that the July-Mar fiscal year 2008 fiscal deficit (as a ratio of GDP) is likely to be greater than the annual figure of the fiscal year 2007, said the report.
Source: Xinhua
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