Despite numerous challenges, Pakistan’s economy performed well in 2012 compared to 2011, United Nations said in its latest survey report.
“There was improved performance in 2012 despite numerous challenges, including heavy rain and flooding in southern parts of the country, increases in fuel and commodity prices, the global slowdown and weak capital inflows,” says the UN Economic and Social Survey of Asia and the Pacific 2013.
According to the report, the country’s GDP grew by 3.7% in 2012 as compared with 3% in 2011 and the agricultural sector also performed better than in 2011.
As for manufacturing, its performance improved and the construction sector staged a strong recovery while higher growth in the industrial sector as a whole was achieved despite shortages of electricity and natural gas.
On the other hand, the services sector witnessed somewhat slower growth, the survey observed. On the demand side, consumption, both private and public, grew at a higher rate in 2012 but investment declined, it said adding as a result, investment fell to 12.5% of GDP in 2012 from 13.1% of GDP in 2011.
Inflation in Pakistan was brought down from 13.7% in 2011 to 11% in 2012 despite increases in international oil prices, the effect of an upward adjustment in the administered prices of electricity and natural gas, supply disruptions due to heavy rains and flooding in the southern part of the country and heavy bank borrowings. The country achieved strong export growth at 28% in 2011 and value of total merchandise exports reached $25 billion. In spite of the crises in the Euro zone, a major destination for Pakistan’s exports, the country could maintain exports at nearly the same level as in the previous year.
Overseas workers’ remittances continued to grow and crossed the $13 billion mark in 2012. The growth rate in remittances over the past two years exceeded 45% partly due to government efforts to divert remittances from informal to formal channels. These remittances have helped in containing the current account deficit.
However, the report pointed out that Pakistan’s economy is passing through a phase of low growth, saying that the protracted energy crisis and weak fiscal fundamentals are the main reasons behind slow growth.
Similarly, the declining trend in private investment expenditures is continuing and without stemming the free fall in investment and addressing the challenge of chronic energy shortages, growth cannot be improved on a sustainable basis.
The report predicted GDP growth of the country at 3.5% in 2013.
