TechLahore
FULL MEMBER
- Joined
- Nov 15, 2009
- Messages
- 1,741
- Reaction score
- 0
Here's to our resilience!
Economy to rebound with 4.5pc
By our correspondent
http://thenews.com.pk/25-09-2010/Business/6429.htm
KARACHI: The worst floods in Pakistan’s history will have a short-term impact on the economy, but it is likely to rebound next fiscal year on strong manufacturing and agriculture growth, the International Monetary Fund (IMF) and Credit Suisse said in a recently released report.
“We expect the Gross Domestic Product (GDP) growth falling to 2.5 percent in 2010/11, but rebound to 4.5 percent in 2011/12,” the report said in its forecast for the Pakistan economy.
According to the report, the agriculture output this year would contract by 1.7 percent, affecting manufacturing and services sectors. “But, the trend is likely to be reversed by better soil fertility and demand resurgence,” it said. Around 12 to 20 percent crop has been damaged by floods, but the impact on livestock sector remained largely moderate. The report placed the losses of cotton, rice and sugarcane crops at $19 billion.
Asset damage, according to the report, remains a major challenge for the post-flood economy. “The impact on growth would be short term, but the asset damage would have long-term implications,” the report said.
With significant infrastructure financing needed, debt vulnerability would rise and affect the medium to long-term direction of capital flows and currency outlook. “We foresee the external debt to GDP rising to 36 percent in current fiscal year, higher than last fiscal year’s 31 percent,” the report said. “Higher future debt servicing obligations would deteriorate balance of payment outlook and result in rupee depreciation.”
The report said that lower tax revenue and higher infrastructure spending and subsidies for farmers would push the fiscal deficit beyond 6 percent against the target of 4 percent this year.
“US$4 billion international assistance should help finance the incremental expenditure and also take care of the short-term balance of payment pressures,” it added. The IMF recently provided $ 451 million emergency assistance to Pakistan in an effort to mitigate the impact of flood-related spending on budget. The emergency assistance is in addition to the $11 billion loan approved in 2008 to shore up foreign exchange reserves and support the ailing economy.
Talking about forthcoming risks and opportunities, the report cited delays in circular debt resolution, additional subsidies and long-term rupee depreciation as major threats to the economy.
“However, the infrastructure-related industries, like cement and steel, stand to benefit,” it added. Fertilisers, cements and Oil Marketing Companies appeared to be the worst hit sectors, with a moderate impact on telecom and banks, the report said.
Economy to rebound with 4.5pc
By our correspondent
http://thenews.com.pk/25-09-2010/Business/6429.htm
KARACHI: The worst floods in Pakistan’s history will have a short-term impact on the economy, but it is likely to rebound next fiscal year on strong manufacturing and agriculture growth, the International Monetary Fund (IMF) and Credit Suisse said in a recently released report.
“We expect the Gross Domestic Product (GDP) growth falling to 2.5 percent in 2010/11, but rebound to 4.5 percent in 2011/12,” the report said in its forecast for the Pakistan economy.
According to the report, the agriculture output this year would contract by 1.7 percent, affecting manufacturing and services sectors. “But, the trend is likely to be reversed by better soil fertility and demand resurgence,” it said. Around 12 to 20 percent crop has been damaged by floods, but the impact on livestock sector remained largely moderate. The report placed the losses of cotton, rice and sugarcane crops at $19 billion.
Asset damage, according to the report, remains a major challenge for the post-flood economy. “The impact on growth would be short term, but the asset damage would have long-term implications,” the report said.
With significant infrastructure financing needed, debt vulnerability would rise and affect the medium to long-term direction of capital flows and currency outlook. “We foresee the external debt to GDP rising to 36 percent in current fiscal year, higher than last fiscal year’s 31 percent,” the report said. “Higher future debt servicing obligations would deteriorate balance of payment outlook and result in rupee depreciation.”
The report said that lower tax revenue and higher infrastructure spending and subsidies for farmers would push the fiscal deficit beyond 6 percent against the target of 4 percent this year.
“US$4 billion international assistance should help finance the incremental expenditure and also take care of the short-term balance of payment pressures,” it added. The IMF recently provided $ 451 million emergency assistance to Pakistan in an effort to mitigate the impact of flood-related spending on budget. The emergency assistance is in addition to the $11 billion loan approved in 2008 to shore up foreign exchange reserves and support the ailing economy.
Talking about forthcoming risks and opportunities, the report cited delays in circular debt resolution, additional subsidies and long-term rupee depreciation as major threats to the economy.
“However, the infrastructure-related industries, like cement and steel, stand to benefit,” it added. Fertilisers, cements and Oil Marketing Companies appeared to be the worst hit sectors, with a moderate impact on telecom and banks, the report said.
