KARACHI
In its annual report on the state of the economy for the year 2009-10, the State Bank of Pakistan (SBP) on Monday said that the country’s economy witnessed a noticeable improvement in the macroeconomic indicators, as it grew at a rate of 4.1 percent compared with only 1.2 percent in the preceding year.
The report said there was a substantial decline in the annual inflation and the current account deficit. Foreign exchange reserves also rose to historic highs during the year, the report added. However, the SBP was unhappy over the government’s failure to address some fundamental structural weaknesses in the economy through key reforms.
It pointed out that the principal structural problem was the weak fiscal performance, as the fiscal deficit bounced back to 6.3 percent of the GDP in 2010 which was 1.1 percentage points higher than the previous year. The report said that due to the recent unprecedented floods, the country’s economic priorities and targets for the fiscal 2011 would see a substantial revision with and all key macroeconomic indicators likely to record deterioration.
It projected that GDP growth in fiscal year 2011 was likely to be between two and three percent, the average annual inflation was expected to be 13.5 percent to 14.5 percent while the fiscal account deficit were likely to be between five to six percent of the GDP and the current account deficit was likely to be between three to four percent of the GDP.
Furthermore, it projected that the workers’ remittances were likely to stay between $9.5 billion to $10.5 billion while exports and imports were likely to be between $20 billion to $21 billion and $34 billion to $35 billion, respectively.
