The government has issued Economic Survey Report 2009-10. Finance Adviser Abdul Hafeez Sheikh while announcing the report said that the economy grew by a provisional 4.1 percent in the outgoing year, after a modest growth of 1.2 percent in 200809. However, the recovery is still fragile and the stabilization needs to be consolidated so that the gains over the past two difficult years are not lost. According to the report, a combination of limited fiscal space and rising spending, debt, and inflationary pressures, significantly reduce the governments ability to spend in order to stimulate the economy. The macroeconomic context remains difficult in the near term with continuing challenges. The global economy remains in turmoil, with uncertain prospects for demand for Pakistans exports. In addition, the energy and water shortage, and the internal security situation, could constrain growth in 201011, the report said. Despite severe challenges, the economy has shown resilience in the outgoing year. Growth in Gross Domestic Product (GDP) for 2009/10, on an inflationadjusted basis, has been recorded at a provisional 4.1%. This compares with GDP growth of 1.2% (revised) in the previous year, the report added. The report underlined that for the outgoing year, the Agriculture sector grew an estimated 2%, against a target of 3.8%, and previous years growth rate of 4%. While the Crops subsector declined 0.4% over the previous year, Livestock posted a healthy rise of 4.1%. Industrial output expanded by 4.9%, with Large Scale Manufacturing (LSM) posting a 4.4% rate of growth. The Services sector grew 4.6%, as compared to 1.6% in 200809. Despite the security situation, overall military spending as a proportion of budget outlays has declined. Another focus has been the rehabilitation of Internally Displaced Persons (IDPs) and reconstruction of affected areas. It is pertinent to note that during 2009, Pakistan had one of the largest IDPs population in the world, with an estimated over 3 million people displaced from their homes in Swat, Bajaur, Malakand division, and South Waziristan agency (SWA), the report said. In fact, according to the latest Labour Force Survey (for 200809), the unemployment rate has increased to 5.5% (from 5.2%), largely due to the increase in urban unemployment to 7.1% (from 6.3%). For the period July to April 200910, FDI totalled US$ 1.8 billion as compared to US$ 3.2 billion in the same period of FY09. This represents a decline of 45 percent, the report added. Overall CPI inflation accelerated to 13.3% yearonyear in April, with food inflation at 14.5% and nonfood inflation at 12.2%. Core inflation, as measured by the rate of increase in prices of nonfood, nonenergy components of the CPI basket, registered an increase of 10.6% yearonyear. On a periodaverage basis, overall inflation was recorded at 11.5% for July to April. The State Bank of Pakistan expects the average CPI inflation for the current fiscal year to remain close to 12 percent, the report added. After a sluggish start, however, and despite a difficult economic situation, tax collection has risen nearly 14% for July to April 20092010, as compared to the corresponding period of 200809. As a percent of GDP, however, tax collection remains low, the report said.
