Keeping inflation in check and making sure economic successes filter throughout all levels will assure Pakistan a solid future.
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Pakistan’s economy will grow by over seven percent this year for the first time since 1996, driven by improved performance in agriculture and the industrial sector, according to the country’s central bank.
Pakistan’s economy will grow by over seven percent this year for the first time since 1996, driven by improved performance in agriculture and the industrial sector, according to the country’s central bank.
The State Bank of Pakistan (SBP), however, said that rising inflation might pose a threat to growth.
Real GDP growth is likely to be between 7.4 and 7.8 percent, compared with the earlier forecast of 5.4 to 7.1 percent, Daily Times reported quoting the bank’s second quarterly review of the fiscal year ending June 2005.
The growth was due to bumper crops following a winter of heavy rain and snow that boosted water supplies and also saw robust industrial development.
But the SBP was concerned about rising inflation, which peaked at 9.9 percent in February, registering a seven-year high. It increased its projection for the whole year from 7.6 percent to between 8.2 and 8.8 percent.
Higher inflation would necessitate a further tightening of monetary policy in the coming months and possibly a further rise in interest rates, the review said.
“The projected improvement in the performance of both industry and agriculture, together with the target-exceeding performance by the services sector, means that real GDP growth during the current fiscal year will be broad-based,” the bank said.
It said Pakistan has also been suffering from rising deficits as the balance of payment deficit swelled to $1.2 billion during July-December. Trade deficit worsened during the fist half of the year by 47.7 percent to reach $2.3 billion, mainly because of a big rise in oil bills and machinery imports. While exports totalled $6.5 billion during the first six months of the fiscal year imports rose a steep 34.8 percent to $8.9 billion.
It said, however, the period saw higher foreign investment, growing by 135.6 percent to $410 million.
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