ADB update says economy looking good

Boosted by macro-economic stability, Pakistan's formerly sluggish economy has shown signs of a healthy upturn with earlier growth-rate projections of 5.3 percent being replaced by predictions that it would reach 5.5 percent, or even beyond, according to the Asian Development Bank's Pakistan Economic Update 2004. The update proffers an analysis of macro-economic developments and trends in the South Asian nation for the first half of the fiscal year. "The pick-up is quite robust. Earlier on, we were all predicting it to be somewhere around 5.3 percent. But, on the basis of fresh six-month figures, it is expected to be higher," Marshuk Ali Shah, the ADB country head, told IRIN in the Pakistani capital, Islamabad. There were chances, given the economy's performance in the first six months, that the growth rate might even exceed 5.5 percent in the second half of the fiscal year, Shah added. "It may even be higher than 5.5 percent. If they maintain the first six months' performance in the second six months, it will definitely be higher than even 5.5 percent," he maintained. "Because of the macro-economic stability, the results are now showing in key areas," Shah said. "I think the principal thing is that there is liquidity in the economy, the interest rates are down, the private sector gradient is building up, investment has started to come in and there has been a very robust growth in exports," he stressed. "The manufacturing sector has also shown very appreciable growth. These are all very good signs that show that the economy is picking up or accelerating," Shah explained. "It is something very good and we are all hoping that Pakistan will be able to achieve that. The 6 percent that the government is aiming for next year is definitely achievable," he said. The report said inflation in the first half of Fiscal Year (FY) 2004 was lower than that in the first half of the previous financial year, but started to rise in October 2003, with Shah admitting that, in a situation where every other trend was positive, this was "worrisome". "It is a little bit worrisome because of the pressure on prices. And we all hope that it is not linked to a high inflation. There is a pressure on prices," he explained. The Pakistani economy's performance, at a time when the global economy was itself not performing greatly, was quite good, the ADB resident head said. "The global economy has been a little strained so the performance by Pakistan has been quite good, even defying the earlier projection of 5.3 percent. So, now if we're saying it's going to be 5.5 percent, or even above that, that means it's better than anticipated," Shah said.