According to a report of the World Bank, Pakistan’s economic outlook has significantly deteriorated since the floods of July-August 2010, which affected all provinces. The flood damage is estimated to be about $10 billion while, the real GDP growth, which was projected to be 4.5 percent this year, is now expected to slow down to somewhere around 2.5-3 percent.
The report says the economy’s external position improved during the first 10 months of Fiscal Year 2010/11 because of robust export growth and strong inflows of workers’ remittances. As a result, the current account deficit fell from $3.9 billion (2 percent of the GDP) in FY2009/10, to $748 million for the first 10 months of FY2010/11. Foreign exchange reserves increased to $14.1 billion by end-February 2011, from $13.0 billion at end-June 2010.
However, it says the major concern remains the large fiscal deficit. A shortfall in fiscal revenues and an overrun on electricity subsidies and security spending led to the budget deficit widening in the first half of the fiscal year to 2.9 percent of GDP (more than 70 percent of the full-year target).
