Pakistan expects GDP to grow up to 4.5%

Karachi: Pakistan's GDP is expected to grow by between 3.5 and 4.5 per cent in the fiscal year 2008-09, slowing from 5.8 per cent growth in the previous year, the central bank said yesterday in its annual report.

"The urgency for macro-economic stabilisation is now evident throughout the economy," State Bank of Pakistan said in its annual report.

The International Monetary Fund, which last month approved a $7.6 billion (Dh27.89 billion) bailout package to help avert balance of payments crisis in Pakistan, has projected GDP growth of 3.4 per cent for the year.

The central bank projected inflation at 20 to 22 per cent in the fiscal year to June 30, just below the IMF forecast of 23 per cent.

Latest data for October showed inflation running at 25 per cent. Pakistan's inflation for fiscal year of 2007-08 was 12 per cent.

The central bank projected the fiscal deficit to range between 4.3 per cent and 4.8 per cent of GDP for the current fiscal year, compared with a target of 4.7 per cent.

Fiscal deficit was 7.4 per cent in the previous fiscal year.

The government hopes to achieve its target by eliminating subsidies and committing to zero net borrowing from the State Bank of Pakistan.

In the first quarter of fiscal year of 2008-09, fiscal deficit was 1 per cent, the central bank said.

The central bank projected the current account deficit to be between 6.2 per cent and 6.8 per cent of GDP in 2008-09, compared with 8.4 per cent in the previous year, when the economy was hit by a sharp rise in international oil and commodity prices and as well as some domestic shocks.

The IMF's projection for current account deficit is 6.5 per cent of GDP for fiscal year ending June 30.