Services sector may record below target growth

[LahoreEstate]

Services sector may record below target growth
RECORDER REPORT
KARACHI (June 05 2009): Slowdown in economic activities as well as poor law & order situation has affected the performance of services sector, which is expected to record below target growth in FY09.

State Bank of Pakistan's third quarterly report released Thursday says that overall domestic economic slowdown was witnessed in FY09, depicted decline in large scale manufacturing, decrease in domestic demand and decline in exports as well as imports are factors impeding growth prospects in services, it added. While, finance & insurance sub-sectors also presents a mixed performance.

Outlook for trading activities is on the down side as the two major components of value addition in trading ie manufacturing and imports exhibit slowdown in FY09. The report said that profits of commercial banks have dropped substantially during the first three quarters of FY09. In contrast, SBP profits witnessed a substantial increase during this period.

Moreover, other financial institutions; including, mutual funds, modarba companies and foreign exchange companies, whose earnings contain higher risk premia and are prone to fluctuation in rupee parity, were negatively impacted by capital market instability in H1-FY09 as well as high National Savings Schemes returns, the report said. Transportation and communication are expected to benefit from relatively lower international oil prices and consolidation of revenues, in addition storage activities exhibit sharp increase in FY09.

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