Pakistans economy has grown at seven percent
Business Tuesday, October 23rd, 2007WASHINGTON Advisor to the Prime Minister on Finance
and Economic Affairs Dr Salman Shah has said that Pakistan’s economy
has grown at an average rate of almost seven percent per annum over the
last four years and positioned as one of the fastest growing economies
in the Asian region.
Speaking at the annual meeting of the boards of governors of the World
Bank (WB) and International Monetary Fund (IMF), he said that the size
of Pakistan’s economy had more than doubled (from 58 billion dollars to
132 billion dollars) and per capita income almost doubled (from 438
dollars to 847 dollars) during the last seven years.
“Prudent
macroeconomic policies and wide-ranging structural reforms underpinned
Pakistan’s economic turnaround and six/seven years of consistent and
transparent economic policies along with economic reforms have
transformed Pakistan into a stable and resurgent economy”, he said.
“How
to sustain the ongoing growth momentum within a stable macroeconomic
environment is the biggest challenge going forward. Linked with this
are the challenges of job creation, further reducing poverty and
meeting the MDGs targets, strengthening the country’s physical
infrastructure to support seven to eight percent growth in the
medium-term and, most importantly, how to reap the benefits of
demographic transition that is currently taking place in Pakistan”, he
added.
Dr Salman Shah pointed out that Pakistan’s economy
continued to gain traction as it experienced the longest spell of its
strongest growth in years, and added the outcomes of the recently
concluded fiscal year indicated that Pakistan’s upbeat economic
momentum remained on track.
He said that economic growth
accelerated to seven percent in the fiscal year, which concluded on
June 30 at the back of robust growth in agriculture, manufacturing and
services, and added Pakistan’s economic growth had been notably stable
and resilient.
The advisor to the Prime minister mentioned that
Pakistan’s real gross domestic product (GDP) had grown at an average
rate of seven percent per annum during the last five years and over 7.5
percent in the last four years in running.
Compared with the
other emerging economies in Asia, he said this had put Pakistan as one
of the fastest growing economies in the region along with China, India
and Vietnam. The good performance had resulted from a combination of
generally sound macroeconomic policies, on-going structural reforms and
maintaining consistency and continuity in policies, he added.
“Based
on the performance of half-a decade of strong, stable, resilient and
broad-based economic growth, we are confident that Pakistan will
continue to be a high mean low variance economy over the medium term”,
he said, and referred to the following other important developments of
the fiscal year, which ended on June 30:
– A sharp pick up in overall investment, reaching at a new height of 23 percent of the GDP.
– Overall budget deficit remained at the target of 4.3 percent of the GDP.
–
Across of all measures vulnerability to external shocks, Pakistan’s
debt profile had improved significantly – public debt declined from
56.9 percent to 53.4 percent of the GDP and the external debt and
liabilities declined from 29.4 percent to 27.1 percent of the GDP.
–
Highest ever-foreign investment flows at 8.4 billion dollars, emerging
as a single largest source of external finance after exports.
– The expatriate Pakistanis remitted 5.5 billion dollars, the highest ever in the country’s history.
– Exchange rate continues to remain stable despite widening of trade and current account deficit.
–
Foreign exchange reserves continue to rise and are sufficient to
provide import cover of almost six months; and most importantly we
successfully launched a new 750 million-dollar 10-year 144 A Sovereign
Bond in international debt capital market with seven times
over-subscription.
These and other measures reflected a strong
vote of confidence of global investors on Pakistan’ current economic
prospect and future economic outlook, he said.
He observed that
the rapid and broad-based economic growth was essential for poverty
reduction and improving income distribution. Strong economic growth,
large inflows of workers’ remittances and massive spending on social
sector and poverty-related programmes in Pakistan in recent years
resulted in sharp reduction in poverty, he said.
At the national
level, headcount decreased from 34.46 percent in 2000-01 to 23.9
percent in 2004-05, depicting a substantial reduction of 10.5 percent
over this period. Most importantly, rural poverty declined more that
the urban poverty. The other indicators of living standards also
exhibited significant improvement, he added.
“While Pakistan’s
economy continues to perform impressively and its economic fundamentals
have gained further strength, there is no room for complacency”, he
said, and added that a relatively higher inflation, largely
attributable to higher food prices and widening of current account
deficit, owing mainly to slower growth in exports were key
macroeconomic challenges confronting Pakistan today.
“The
government has already taken various measures to address these two
challenges and we believe that going forward, inflationary pressures is
likely to ease further and the gap in external account is likely to
narrow.
“Going by the trend of the last half a decade,
Pakistan’s economic outlook for the current fiscal year remains
favourable even in the midst of global liquidity crunch and sub-prime
mortgage issues. We have targeted a real GDP growth of 7.2 percent of
the current year, ably supported by robust growth in agriculture,
industry and services sector”, he said.
“The current
inflationary trend, largely attributable to higher food prices is
likely to ease further during the current year. The process of fiscal
consolidation along with improvement in quality of expenditure will
continue as well as gap on external account will be narrowed further in
the current fiscal year. Although the country’s debt burden has
declined substantially in recent years, effort to reduce it further is
the key policy objective of the current fiscal year. Despite this
growth performance, we are not complacent”, he added.
Salman
Shah said that Pakistan greatly valued its partnership and engagement
with the Fund and WBG. “We look forward to continuing to work together
to achieve our shared goal of reducing global poverty and promoting
inclusive and sustainable development”, he added.
“Global
challenges are our shared responsibility and require global solutions,
global resources and leadership and to meet the major challenges of our
times, our international institutions have also to reform, improve
their internal governance, adjust their business model and strategies
to remain relevant and deliver effective results”, he said, and added:
“We fully support the strategic directions set out for the WBG by
President Zoellick in his vision for an inclusive and sustainable
globalisation”.
The underlining principles and the framework
clearly articulated the value proposition the WBG could offer to its
diverse client segments through a more differentiated menu of products,
services and support.
“We also welcome the reaffirmation to
integrate group-wide services to bring synergy within all the
institutions of WBG, improve internal governance, address issues of
voice and under representation of the developing countries, and develop
closer cooperation with other multilaterals to foster regional and
global public goods in pursuance of its poverty reduction and
development mandate.
“However, to be operationally successful
and responsive to the differentiated and evolving demands across its
membership, the strategy must retain flexibility and promote use of
country ownership and the country systems, reduce non-financial costs
of doing business with the Bank and, strengthen countries institutional
capacities,” he said.
He welcomed the initial progress made by
the WBG in implementing its Clean Energy Investment Framework. While
implementing this agenda, he urged the bank to strive for the right
balance between access to modern energy services for the poor and the
promotion of low carbon emission economy without in any way
compromising its developmental and poverty reduction mission.
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on Oct 23 2007. Filed under