UNITED NATIONS, Jan 26: The phasing out of the Agreement on Textile and Clothing (ATC) at the beginning of 2005 would benefit Pakistan and India, a United Nations report said on Tuesday.
The report "World Economic Situation and Prospects 2005" said that there was particularly strong growth of large-scale manufacturing in Pakistan in 2004 driven mainly by strong textile export growth.
It also noted that the industrial production had also registered healthy growth in India and Bangladesh due to strong domestic and external demand. But the report said that the phasing out of ATC could initially impact Bangladesh and Sri Lanka adversely.
The region's international trade was buoyant in 2004 and is expected to remain strong in 2005, although export growth will slow from its performance in 2004 due to weakening external demand growth, the report said.
South Asia's growth in 2004 was 6.3 per cent, falling 0.4 percentage points short of growth in the previous year. In 2003, exceptionally good weather resulted in a strong agricultural performance whereas growth in 2004 was undermined by less favourable weather conditions, with below normal rainfalls in Sri Lanka, India and Pakistan and heavy floods in Bangladesh.
The services and manufacturing sectors were the main drivers of growth for the net oil importing countries in 2004, a trend which is expected to continue in 2005. Higher oil and non-oil commodity prices began to weigh on the net oil importing countries of the region, while the Islamic Republic of Iran benefited from the higher oil prices, as well as from increased oil production and exports.
However the report said in 2005, normal weather conditions should allow for a rebound in agricultural production. Some slowdown in the global economy is expected to reduce external demand for the region's main exports, but a slight decline in oil prices will benefit net oil importers, while slowing Iran's growth performance only marginally.
