Pakistan’s economic growth prospects continue to improve

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ISLAMABAD, April 25 (APP): Pakistan’s growth prospects continue
to improve with impetus of growth projected to come from services and the industrial sector, said a news report published in the Daily Financial
Times while referring to the data of a latest World Bank report.
The report titled “Globalization Backlash”, which discussed South
Asian economies, projected the economy to grow by 5.2 percent in the
current fiscal year while inflation continues to be contained.
On the demand side, the near-term growth outlook will primarily be
supported by public and private consumption. Investment to GDP ratio will improve
marginally due to CPEC and other public investment, the report added.
“On the supply side, impetus to growth is projected to come from
services and the industrial sector. The services sector is expected to grow by 5.6 per
cent and the industrial sector is expected to grow by 6.1 percent in FY2017,” the report
said.
The China Pakistan Economic Corridor (CPEC) projects have
supported construction activity, which is expected to stimulate industrial sector growth
in the second half of FY2017. Large Scale Manufacturing (LSM) growth, year-on-year,
remained at 3.9 per cent during the first half of FY2017, supported by growth in
automobiles, construction, food & beverages, pharmaceuticals, and fertilizer. After a
weak performance in the FY2016,
the agriculture sector is expected togrow at 3.4 per cent in the FY2017.
The report expected the current account deficit to widen from 1.2
per cent of GDP in FY2016 to 2.2 percent in FY2017 and 2.4 per cent by FY2019. The
key contributor to this will be a widening of the trade
deficit due to moderate growth in exports. The export decline is also supported by
weakening of exports to competitiveness and global demand, while the high growth in
import is due to increase economic activity. The ongoing China Pakistan Economic
Corridor is helping the FDI inflow and the accelerated implementation of CPEC projects
will help further strengthen it.
Official foreign exchange reserves are projected to decline to 3.2
months of imports by FY2019 due to larger current account deficit, and higher debt
repayments, including IMF repayments. The report projected the fiscal deficit to be 4.8
percent in FY2017, 0.3 percentage point higher
than the FY2016 deficit.