47. Pakistan Economic Survey 2011-12 - Consultancy Services in ...

Pakistan Economic Survey 2011-12in the last year. Although the Services sectorrecorded steady growth of 4.02 percent ascompared to 4.45 percent in 2010-11, this waslower than the target of 5.0 percent set for theoutgoing year. Figure-1.1 presents an overview ofGDP growth over the previous years.Fig-1.1 GDP Growth (%)10.09.08.07.06.05.04.03.02.01.00.02.03.14.77.59.05.86.83.71.73.1 3.03.72000-012001-022002-032003-042004-052005-062006-072007-082008-092009-102010-112011-12The 3.7 percent growth based on the nine monthsdata 2011-12, up from 1.7 percent in 2008-09 and3.0 percent last year, indicates the potential growthtrajectory. The country has enormous potential togrow at much higher rates which is demonstratedby the achievement of the 3.7 percent growth thisyear despite the numerous internal and externalshocks that the economy has been forced towithstand.Some of Pakistan’s economic problems arestructural in nature. The objectives of sustaininghigh growth, low inflation, and external paymentviability can not be achieved without removingcertain structural barriers. To this end the majorstructural reforms of the government have includedtax legislation, trade reforms, further privatizationof State Owned Enterprises (SOEs), financialsector reforms, human resource development andsocial protection. The EU approval of duty waiveron textile items is being pursued aggressively,which would help in improving the exports andproviding support to the business environment. Inrecent times, Pakistan has also undergone politicaland constitutional changes. Civil societies andother organizations are now playing a more activeand independent role and this coupled withgovernment reforms are helping economic growth.Global DevelopmentsThe International Monetary Fund (IMF) haswarned that the euro zone debt crisis is escalatingand dragging down the entire world economy. Inthis scenario China has remained a bright spot. Itsgrowth rate, although down to a forecast of 8.2percent for this year compared to 9.2 percent lastyear, has remained relatively high. If China canmaintain its growth, it’s good for the world,providing support for commodities markets andgrowth in other countries.The IMF maintained its forecast of 2.1 percentgrowth for the US in the year 2012 and 2.4 percentfor the year 2013. For Japan the growth rateprojected for 2012 is 2.0 percent and for 2013 it is1.7 percent. Overall, economic activity inadvanced economies is likely to expand by 1.7percent on average in 2012 and 2013. Growth inemerging economies is projected at 5.7 percent in2012. The IMF expects growth in oil exportingcountries in the Middle East and North Africa toslow to 3.9 percent in 2012, from 4.9 percent in2011. Net oil importers in the Middle East andNorth Africa region are expected to record 2.6percent growth in 2012, after sluggish growth of1.4 percent in 2011. GDP growth across the GulfCooperation Council (GCC) countries is expectedto be moderate at a rate of 4 percent in 2012.Unfortunately, Europe is now caught in a viciouscycle of high debt and low growth. Highlyburdened by debt, most of the economies in theregion may not attain respectable levels of growthto improve their fiscal position. This will imply2