Economic Review 2004-2005
Pakistan’s economy extended its impressive expansion for the third year in a row in 2004-05. Economic growth at 8.4 percent reached its highest level in two decades, the fifth time in the country’s history that it exceeded 8 percent growth mark.
Real GDP grew by 8.4 percent in 2004-05 as against 6.4 percent last year and surpassed the target of 6.6% for the year by a wide margin. The sharp pick up in growth is ably supported by large-scale manufacturing, impressive recovery in agriculture and a strong growth in services sector. Large scale manufacturing grew by 15.4 percent against the target of 12.2 percent. Agriculture posted a growth of 7.5 percent against the target of 4.0 percent on the back of unprecedented rise in the production of cotton and high growth in wheat production. The services sector registered an equally strong growth of 7.9 percent aided by remarkable growth in finance and banking sector (21.8%), wholesale and retail trade (12%) and a modest growth in transport and communication (5.6%).
Investment is a key determinant of growth. During the fiscal year 2004-05 gross fixed capital formation or domestic fixed investment grew by 15.6 percent as against a sharp rise of 17.4 percent last year. Although the growth in domestic investment was marginally slower than last year, private sector investment grew by 19.3 percent this year as against a growth of 9.6 percent last year. Public sector investment on the other hand registered marginal decline of 4 percent as against a hefty 36.8 percent increase last year.
Inflation, as measured by changes in the Consumer Price Index (CPI), averaged 9.3 percent during fiscal year 2004-05 as against 4.6 percent in the last year.
External sector is being affected both by structural and cyclical factors. Exports and imports both grew by 17 percent and 32.3 percent respectively during 2004-05.
The tax revenue... [continues]
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