Salient features of State Bank of Pakistan Report 2011-12

February 4, 2013 | By More

The State Bank of Pakistan has released the report on January 30, 2013, the salient features of which are as under:-

  • Pakistan’s economy grows by 3.7% in FY12 witnessing a modest improvement compared with 3.0 percent in FY11.
  • The growth was more broad-based compared to FY11, as it was evenly distributed across agriculture, industry and the services sectors.
  • The demand side was more insightful, as the growth in FY12 was primarily driven by private consumption.
  • The food prices have remained relatively stable during FY12, which helped bring down overall inflation to 11.1 percent – better than the 12.0 percent projected earlier.
  • It was this easing that allowed the central bank to reduce the policy rate by 200 bps during the year. This was done to partially revive private sector borrowing and encourage banks to improve their inter mediation between private savers and borrowers
  • The external front was positive as remittances posted yet another year of strong growth, which not only helped narrow the current account deficit, but also contributed to economic activity.
  • In overall terms, the external sector has been less worrying than anticipated at the beginning of the year. However, as financial inflows dried up, the burden of financing the current account deficit and external debt has fallen on the country’s FX reserves.
  • While services sector continued to support the economy, commodity producing sectors (agriculture and industry) posted an improvement over FY11, while the growth in agriculture came from livestock and kharif crops, but minor crops witnessed a decline due to the floods in Q1-FY12.
  • The positive spillovers from agriculture, coupled with strong remittances and income support schemes boosted construction activities and household consumption – both of which helped the manufacturing sector.
  • In terms of services, there was a sharp improvement in financial sector earnings, driven primarily by the volume of commercial bank financing of the fiscal deficit and deceleration in fresh non-performing loans (NPLs).

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Category: Trade & Economy

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