Floods, oil prices push Pakistan growth rate down

08:34, June 03, 2011      

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The devastating floods, increase in international oil prices and security situation in Pakistan had been the three main factors that hit the country's economy and subsequently resulted in slowdown in growth rate during the current fiscal year 2010-11 ending on June 30, Pakistani finance minister said Thursday.

Addressing a press conference at the launching ceremony of economic survey, a document released ahead of the annual budget, Abdul Hafeez Shaikh said that despite these challenges, the growth rate stayed positive.

The GDP for year 2010-11 was fixed to grow at 4.5 percent, however due to the devastating floods that hit the economy badly, the growth rate reduced to 2.4 percent, Shaikh told the news conference.

Shaikh said that the exports have witnessed growth of 28 percent by increasing from 18.8 billion U.S. dollars last year to 20.2 billion during July-April (2010-11). He said that the export figures are expected to cross the 24 billion figure this year.

The remittances also witnessed a considerable growth during July-April (2010-11) by growing from 7.3 billion dollars during the same period of last year to 9.1 billion.

He said a major setback to economy was done by the floods of 2010 that affected about 1.6 million families having 20 million members besides causing damages to infrastructure, agriculture and other properties worth 10 billion dollars.

The minister said security situation was also taking toll on economy as business activities in some areas have curtailed while the name of the country is also being defamed abroad that causes decline in investments.

He said that the third major challenges that the economy faced during the outgoing fiscal year was the increase in international oil prices which have also affected the performance of the industrial and manufacturing sector.

The fiscal deficit for the year 2010-11 was expected to remain 4 percent of GDP, however, due to unfavorable circumstance, it grew to 5.1 percent, he said.

He said that the investment to GDP ratio was recorded at 13.4 percent during the year against 15.4 percent last year adding that security and high input rates were the main hurdles in investments.

Source: Xinhua
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