WASHINGTON, June 7: The world’s second fastest growing economy after China is no longer India. It’s Pakistan, says a commentary on Pakistan’s budget by US financial wire service Bloomberg. Another financial news service, Forbes, commented that Pakistan had seen a swift economic turnaround after the Sept 11, 2001, attacks in the United States when it threw its support behind Washington in the war on terror, and in return America and many other countries gave it financial assistance or rescheduled and wrote off its loans.

Forbes said Prime Minister Shaukat Aziz played a key role in “reviving a near-bankrupt economy”.

In a commentary titled ‘Pakistan’s economy posts historic gains,’ the Voice of America said it was quite a turnaround for a country that five years ago nearly defaulted on a series of international loans and now was one of Asia’s five fastest growing economies.

The country’s agriculture and service sectors grew by over seven per cent in the past year and its large-scale manufacturing sector was up 15.4 per cent, it pointed out.

Other commentators noted that the budget had been widely welcomed as pro-business, helping the Karachi Stock Exchange enjoy a three per cent rise in Tuesday trading.

The budget cut a number of business taxes, in addition to dedicating more money for defence and social and development spending, they said. The cuts included a one per cent rebate on the tax firms must pay when listing on the stock exchange and exemptions from capital gains tax for investment in agriculture-related sectors. The government also announced an increase in the tax-free allowance on profits from stock investment to Rs150,000 from Rs100,000. There was also no mention of any increase in capital value tax on share transactions, which some investors had feared.

Pakistan’s economy was strong, growing at 8.4 per cent this fiscal year, they said.

Some development analysts, however, criticized the budget saying it did not do enough for ordinary people.

Referring to figures released over the weekend, commentators noted that the $110 billion economy was estimated to have grown by 8.4 per cent in the current fiscal year, compared with 9.5 per cent expansion in China’s gross domestic product last year while India recorded 6.9 per cent GDP growth in the 12 months with ended on March 31.

The growth target for the next fiscal year, as set out in the budget, was eight per cent, the same as Beijing’s goal.

“That may be a trifle over optimistic. Pakistan isn’t yet ready to sustain eight per cent growth year after year — not until it can push up its savings rate, which is languishing at 14 per cent of the GDP,” observed Bloomberg.

It noted that inflation was at an eight-year high of 11 per cent, a clear indication of an economy overheating from too much consumption.

“Still, another year of strong growth is eminently achievable in Pakistan, provided the central bank can manoeuvre deftly to suppress inflationary expectations, even as the government goes ahead and steps up investments in public works,” it said.