ISLAMABAD: The Asian Development Bank says that Pakistan’s economic outlook is expected to stay modest in the absence of a predictable energy supply and improved investments.
Growth in FY2012 is likely to hover around 3.6%, the Asian Development Bank (ADB) says in its annual flagship publication, the Asian Development Outlook (ADO) 2012.Power is the main constraint for economic growth, as load-shedding intensifies and becomes less predictable, this reduced economic output, hitting manufacturing the hardest, the report said on Wednesday.Fiscal developments for FY2012 present a mixed picture and the Federal Board of Revenue collections are much improved, running a full 33% ahead of last year’s performance for the first 6 months, it said.
“This reflects improved economic activity in the first half of the year, as well as extension of the flood-related tax surcharges and improvements to tax administration. Yet meeting the overall revenue target for FY2012 in part depends on the sale of third-generation telecoms licenses in the latter part FY2012—a sale already rescheduled over the past 2 years”.According to the report, the external accounts returns to deficit, with scant cushion from the financial and capital accounts. Lower prices for key export commodities, particularly cotton, combined with higher import prices, pushed the current account from near balance for the first 7 months of FY2011 to a deficit of to a deficit of $26 billion (1.8% of GDP) by end-January 2012.
Workers’ remittances expanded by 23.4% during July 2011–February 2012, slightly slower than the pace for the same period a year earlier. However, the economy will remain exposed to balance of payment pressure in the current international environment and subdued growth in other Asian countries, says the ADO 2012 launched in Hong Kong, China on Wednesday.Beyond the immediate fiscal and energy improvement steps, the country needs clear business plans to boost the economy, in particular manufacturing and infrastructure development, to sustain growth and generate jobs, the report said.