GDP growth falls to 2.4% in current fiscal

The gross domestic product (GDP) growth rate fell to 2.4 percent, almost half of the projected target of 4.5 percent, tax revenue in the first 10 months amounted to Rs 1,156 billion as compared to the revised target of 1,588 billion, while the inflation surged to 14 percent during the current fiscal year, says Economic Survey 2010-11.
The government failed to achieve all its targets during the current fiscal year, as the agriculture growth stood at 1.2 percent against the target of 3.8 percent, while the manufacturing sector growth remained negative at minus 0.1 percent and the supply of electricity, gas and water growth worsened to minus 21 percent, large industries grew by 1 percent, while small industries growth increased by 7.5 percent. It says the energy crisis and paucity of foreign investment hit the industrial growth.
The report attributes the low tax collection to slowing down of the economic activity, however, adding that it amounted to 12.6 percent higher than the previous year. In the first 10 months tax revenue amounted to Rs 1,156 billion as against the revised target of Rs 1,588 billion. The budget deficit was estimated to be 4.7 percent of the GDP, while it is estimated to remain near 5.5 percent.
Government borrowing remained at Rs 342.2 during the first 10 months, of which Rs 472.2 were borrowed for the budgetary support, which also includes borrowing of Rs 196.3 billion from the central bank. Only the services sector recorded a growth of 4.7 percent against the target of 4.1 percent. The inflation during July-April period remained at 14 percent, while the general kitchen items prices hiked by 18.42 percent.
The inflation rate is likely to go up to 15 percent by the end of the current fiscal year, it said. The saving rate remained at 12.9 percent against the target at 14.5 percent, investment growth rate at 13.4 against the target of 17.9 percent, while the foreign direct investment during July-March of the current fiscal year plunged by 29 percent and investment in the stock market declined by 33 percent. The volume of investment at the stock exchanges was recorded at Rs 920 billion during the current fiscal year.
The trade deficit declined by 2.2 percent and it amounted to $8 billion in the first 10 months of the current fiscal year. The exports are expected to be close to $24.6 billion while the remittances from overseas Pakistanis are expected to rise to $12 billion during the current fiscal year.