GDP growth seen lower than target: SBP

[Naveed Yaseen]

* SBP report says government cut development expenses to control fiscal deficit

KARACHI: The State Bank of Pakistan (SBP) on Monday said the real gross domestic product (GDP) growth was likely to be lower than the annual target and inflation in the country would breach its target.

It said that country’s GDP growth would fall between 3.5 percent and 4.5 percent this year from last year’s 5.8 percent, and would miss the targeted growth of 5.5 percent.

Projecting the major economic indicators of FY08-09 in its first quarterly report, the SBP said the average inflation, measured through the consumer price index, would stay between 20-22 percent during the year.

It said the exports target of $22.9 billion would be missed, and the exports might fetch only $20.5 billion to $22 billion. However, import growth was expected to be curtailed to $33.5 billion to $35 billion compared to an earlier estimate of $37.2 billion, the report said.

Deficit: Both fiscal and current account deficits were, however, estimated to improve in the current fiscal year, it said.

“The reduction in fiscal deficit in the first quarter was brought about by a drastic cut in development expenditures,” the report said.

The report said large-scale manufacturing (LSM) continued to decline, as it registered a negative growth of 6.2 percent in the first quarter against 7.3 percent in the same period last year.

The SBP said agricultural growth in the current fiscal year could be significantly better than in the last, but a sharp fall in sugarcane harvest would be seen.

“This expectation is based on a record rice harvest of 6.5 million tonnes, a small improvement in cotton production, supported by the possibility of a record wheat harvest,” it said. staff report

http://www.dailytimes.com.pk/default.asp...008_pg1_12