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Pakistan Economy

The Fiscal year 2007-2008 has exposed the vulnerability of sustainability of the growth over medium to long term due to high inflation (both core and food) and burgeoning Fiscal and Current Account deficits. These factors have already started straining the Reform Process and putting pressure on a delicate balance between fiscal and monetary policy initiatives to manage the economy. The year did have its own uniqueness in terms of continuing judicial crisis, imposition of emergency and the new government which emerged as a result of February 2008 Elections. The new democratically elected government has inherited an economy which after a few years of continuing high growth of around 6 to 7 percent is being threatened by domestic and global market issues. The domestic factors are both political and economic policy failures, continuing political uncertainty, judicial crisis and inadequate focus on structural weakness in key sectors such as energy, agriculture and exports, high food and core inflation and increasing sense of deprivation in lower income groups. The weak and bearish sentiments across global markets, potential recession and slow down in developed economies, global commodity shortage and high prices and continuing increase in crude oil prices, have further aggravated the situation. The economic data indicates a decline in GDP growth which is not broad based and three fourths of the growth was contributed by Services sector alone.

'' GDP growth of 5.8 percent in 2007- 2008 (2006-2007 6.8 percent) has been
    contributed as follows:

Contribution[pic] to
A number of key targets have been missed which are generally summarized as follows:
(Percentages)

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The composition of GDP growth in various sectors has been summarized in the table below:

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'' Per capita income increased by 17.2 percent in dollar terms from $925 to $1085 per annum.

'' The target for inflation for the year was set at 6.5 percent. However, as of 30...