Friday, June 12, 2009
ISLAMABAD: Advisor to Prime Minister on Finance Shaukat Tarin said on Thursday that finance and insurance sector registered a negative growth of 1.2 percent in ongoing fiscal year ie 2008-09 whereas real GDP growth stood at 2 percent against 4.1 percent last year.
While launching Economic Survey 2008-09, Tarin stated that the performance of finance and insurance sector shows that Pakistan's financial sector is integrated in the world economy and is feeling the heat of the crisis plaguing international financial markets.
He said that total investment declined from 22.5 percent of GDP in 2006-07 to 19.7 percent of GDP in 2008-09. Fixed investment fell to 18.1 percent of GDP from 20.4 percent last year. Private sector investment was decelerating persistently since 2004-05 and its ratio to GDP has declined from 15.7 percent in 2004-05 to 13.2 percent in 2008-09.
Public sector investment to GDP ratio, which has been depicting a consistent increase from 4 percent in 2002-03 to 5.6 percent in 2006-07, declined to 4.9 percent in 2008-09. The overall foreign investment during the first 10 months (July-April) of the current fiscal year declined by 42.7 percent and stood at $2.2 billion against $3.9 billion in the comparable period of last year, the advisor said.
He said that foreign direct investment (private) showed some resilience and stood at $3205.4 million during the first 10 months of the current fiscal year against $3719.1 million in the same period last year thereby showing a decline of 13.8 percent. Private portfolio investment on the other hand showed a net outflow of $451.5 million against a net inflow of $98.9 million during the comparable period of last year.
Agriculture sector depicted a stellar growth of 4.7 percent as compared to 1.1 percent witnessed last year. Major crops registered an impressive growth of 7.7 percent against a negative growth of 6.4 percent last year and the livestock sector grew by 3.7 percent against 4.2 percent last year.
The advisor said that the output in the manufacturing sector contracted by 3.3 percent in 2008-09 as compared to expansion of 4.8 percent last year. Small and medium manufacturing sector maintained its healthy growth of last year at 7.5 percent. Large-scale manufacturing depicted contraction of 7.7 percent against expansion of 4 percent during last year.
The massive contraction is because of acute energy outages, a weak security environment and political disruption in March 2009. He said that the services sector grew by 3.6 percent against the target of 6.1 percent and value added in the wholesale and retail trade sector grew at 3.1 percent as compared to 5.3 percent last year. Finance and insurance sector registered negative growth of 1.2 percent in 2008-09.
He noted that the performance of this sector shows that Pakistan's financial sector is integrated in the world economy and is feeling the heat of the crisis plaguing international financial markets. The transport, storage and communication sub-sector depicted a sharp deceleration in growth to 2.9 percent in 2008-09 as compared to 5.7 percent last year.
He said that Pakistan's per capita real income has risen by 2.5 percent in 2008-09 as against 3.4 percent last year. The per capita income in dollar term rose from $1042 last year to $1046 in 2008-09, thereby showing marginal increase of 0.3 percent.
Real private consumption rose by 5.2 percent against negative growth of 1.3 percent attained last year. However, gross fixed capital formation could not maintain its strong growth momentum and real fixed investment growth contracted by 6.9 percent against the expansion of 3.8 percent in the last fiscal year. Large-scale manufacturing witnessed an across-the-board decline of 7.7 percent during ongoing fiscal year against the growth rate of 5.2 percent last year.
Severe energy shortages, deterioration in domestic law and order situation, sharp depreciation in rupee vis-à-vis US dollar and most importantly, weak external demand on the back of global recession coupled with slowdown in domestic demand are responsible factors for sluggish performance of manufacturing sector.
Interest payments surpassed their budgeted level by a significant margin. A sum of Rs 557 billion was budgeted for interest payments in 2008-09. The year is likely to end with interest payments of Rs 618 billion which are higher by Rs 61 billion over budgeted amount.
He said that government borrowing from the central bank has been dampened since December 2008 in line with the target set under the macroeconomic stabilisation programme as part of the IMF Stand-By Arrangement. The government budgetary borrowing from the banking system decreased by Rs 339.9 billion during July-May FY 09 against an increase of Rs 360.4 billion in the corresponding period of FY08.
Credit to private sector grew by Rs 21.8 billion during July-May in ongoing fiscal year as compared to Rs 369.8 billion during the corresponding period last year. Foreign portfolio investment stood at a negative $418.4 million during first nine months of 2008-09.Dismal performance owing to a confluence of factors was exhibited by different sectors of the economy and the dull indicators left a weighty impact on the stock market activity during 2008-09.
He said that the inflation rate as measured by the changes in Consumer Price Index (CPI) stood at 22.3 percent during the first 10 months (July-April) of the current fiscal year ie 2008-09, against 10.3 percent in the comparable period of last year. The food inflation is estimated at 26.6 percent and non-food 19.0 percent, against 15.0 percent and 6.8 percent in the corresponding period of last year.
The increase in inflation rate during the current 2008-09 is attributable to the increase in food price inflation which has been due to increase in prices of wheat, wheat flour, sugar, milk, poultry, meat, fresh vegetables and fruits. Services account deficit shrank by 41.3 percent during July-April 2008-09 to reach $3. billion and financial account contracts from $6,224 million to $3,476 million during July-April against corresponding period last year.
Workers remittances amounted to $6355.6 million in July-April against $5319.1 in corresponding period last year, thereby showing an increase of 19.5 percent. Pakistan's total liquid foreign exchange reserves amounted to $11.6 billion by the end of May 2009.Of which, reserves held by State Bank of Pakistan stood at $8.28 billion and banks at 3.32 billion, the advisor said.
While launching Economic Survey 2008-09, Tarin stated that the performance of finance and insurance sector shows that Pakistan's financial sector is integrated in the world economy and is feeling the heat of the crisis plaguing international financial markets.
He said that total investment declined from 22.5 percent of GDP in 2006-07 to 19.7 percent of GDP in 2008-09. Fixed investment fell to 18.1 percent of GDP from 20.4 percent last year. Private sector investment was decelerating persistently since 2004-05 and its ratio to GDP has declined from 15.7 percent in 2004-05 to 13.2 percent in 2008-09.
Public sector investment to GDP ratio, which has been depicting a consistent increase from 4 percent in 2002-03 to 5.6 percent in 2006-07, declined to 4.9 percent in 2008-09. The overall foreign investment during the first 10 months (July-April) of the current fiscal year declined by 42.7 percent and stood at $2.2 billion against $3.9 billion in the comparable period of last year, the advisor said.
He said that foreign direct investment (private) showed some resilience and stood at $3205.4 million during the first 10 months of the current fiscal year against $3719.1 million in the same period last year thereby showing a decline of 13.8 percent. Private portfolio investment on the other hand showed a net outflow of $451.5 million against a net inflow of $98.9 million during the comparable period of last year.
Agriculture sector depicted a stellar growth of 4.7 percent as compared to 1.1 percent witnessed last year. Major crops registered an impressive growth of 7.7 percent against a negative growth of 6.4 percent last year and the livestock sector grew by 3.7 percent against 4.2 percent last year.
The advisor said that the output in the manufacturing sector contracted by 3.3 percent in 2008-09 as compared to expansion of 4.8 percent last year. Small and medium manufacturing sector maintained its healthy growth of last year at 7.5 percent. Large-scale manufacturing depicted contraction of 7.7 percent against expansion of 4 percent during last year.
The massive contraction is because of acute energy outages, a weak security environment and political disruption in March 2009. He said that the services sector grew by 3.6 percent against the target of 6.1 percent and value added in the wholesale and retail trade sector grew at 3.1 percent as compared to 5.3 percent last year. Finance and insurance sector registered negative growth of 1.2 percent in 2008-09.
He noted that the performance of this sector shows that Pakistan's financial sector is integrated in the world economy and is feeling the heat of the crisis plaguing international financial markets. The transport, storage and communication sub-sector depicted a sharp deceleration in growth to 2.9 percent in 2008-09 as compared to 5.7 percent last year.
He said that Pakistan's per capita real income has risen by 2.5 percent in 2008-09 as against 3.4 percent last year. The per capita income in dollar term rose from $1042 last year to $1046 in 2008-09, thereby showing marginal increase of 0.3 percent.
Real private consumption rose by 5.2 percent against negative growth of 1.3 percent attained last year. However, gross fixed capital formation could not maintain its strong growth momentum and real fixed investment growth contracted by 6.9 percent against the expansion of 3.8 percent in the last fiscal year. Large-scale manufacturing witnessed an across-the-board decline of 7.7 percent during ongoing fiscal year against the growth rate of 5.2 percent last year.
Severe energy shortages, deterioration in domestic law and order situation, sharp depreciation in rupee vis-à-vis US dollar and most importantly, weak external demand on the back of global recession coupled with slowdown in domestic demand are responsible factors for sluggish performance of manufacturing sector.
Interest payments surpassed their budgeted level by a significant margin. A sum of Rs 557 billion was budgeted for interest payments in 2008-09. The year is likely to end with interest payments of Rs 618 billion which are higher by Rs 61 billion over budgeted amount.
He said that government borrowing from the central bank has been dampened since December 2008 in line with the target set under the macroeconomic stabilisation programme as part of the IMF Stand-By Arrangement. The government budgetary borrowing from the banking system decreased by Rs 339.9 billion during July-May FY 09 against an increase of Rs 360.4 billion in the corresponding period of FY08.
Credit to private sector grew by Rs 21.8 billion during July-May in ongoing fiscal year as compared to Rs 369.8 billion during the corresponding period last year. Foreign portfolio investment stood at a negative $418.4 million during first nine months of 2008-09.Dismal performance owing to a confluence of factors was exhibited by different sectors of the economy and the dull indicators left a weighty impact on the stock market activity during 2008-09.
He said that the inflation rate as measured by the changes in Consumer Price Index (CPI) stood at 22.3 percent during the first 10 months (July-April) of the current fiscal year ie 2008-09, against 10.3 percent in the comparable period of last year. The food inflation is estimated at 26.6 percent and non-food 19.0 percent, against 15.0 percent and 6.8 percent in the corresponding period of last year.
The increase in inflation rate during the current 2008-09 is attributable to the increase in food price inflation which has been due to increase in prices of wheat, wheat flour, sugar, milk, poultry, meat, fresh vegetables and fruits. Services account deficit shrank by 41.3 percent during July-April 2008-09 to reach $3. billion and financial account contracts from $6,224 million to $3,476 million during July-April against corresponding period last year.
Workers remittances amounted to $6355.6 million in July-April against $5319.1 in corresponding period last year, thereby showing an increase of 19.5 percent. Pakistan's total liquid foreign exchange reserves amounted to $11.6 billion by the end of May 2009.Of which, reserves held by State Bank of Pakistan stood at $8.28 billion and banks at 3.32 billion, the advisor said.
Courtesy: BRecorder
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