SBP predicts 2.5 to 3.5 percent growth rate 2009-10

Report by State Bank of Pakistan.
KARACHI: Pakistan’s economy is showing a gradual recovery and real gross domestic product (GDP) growth is likely to be close to the target of 3.3 percent during the current fiscal year (2009-10), according to State Bank’s Annual Report on State of the Economy for the year 2008-09 released Thursday.

The Report said that signs of recovery during FY10 are evident from a rise in imports during July 2009, which points towards a possible pick up in domestic demand, comparatively lower decline in large scale manufacturing (LSM) growth and resolution of circular debt problem that would support production activities in oil and energy sectors.

Moreover, SBP Report pointed out that a sharp fall in inflation in recent months has reduced uncertainty over relative prices and would support increase in investment demand. Although current SBP projections indicate that average annual inflation for FY10 is likely to ease, there remain significant risks to the inflation outlook.

Going forward, the Report projected that GDP growth is likely to be between 2.5 - 3.5 percent in FY10, while average CPI annual inflation is expected to be 10 - 12 percent and both the fiscal and current account deficits are likely to be 4.7 - 5.2 percent.