June 12, 2008	Thursday	Jamadi-us-Sani 07, 1429

ISLAMABAD, June 11: The cash-strapped government on Wednesday set a modest GDP growth rate of 5.5 per cent for the next financial year by lowering it from this year’s 5.8 per cent.

The next year’s GDP growth target is expected to be achieved through a 3.5 per cent growth in agriculture, 6.1 per cent each in manufacturing and services while keeping inflation at about 12 per cent.

The government has set an investment target of Rs2.638 trillion, 17 per cent higher than the outgoing fiscal year.

In its Annual Plan 2008-09, the government admitted that it would be impossible to bring down the CPI inflation from the current level of 10.5 per cent because of the rising trend in international oil prices coupled with global food shortages.

The annual plan said that the ratio of investment to GDP would stay around 21.5 per cent, almost the same level of the outgoing year. For financing the required investment, national savings as ratio to GDP is projected to increase to 14.3 per cent, compared to 13.3 per cent this year.

Exports are expected to grow by 16 per cent to $22.9 billion from $19.7 billion of the outgoing year. The government said the export target was in line with the Mid-Term Development Plan (MTDP) 2005-10 and the Pakistan Export Plan 2006-13.

Imports are expected to increase by 6.5 per cent to $37.2 billion because of rising food and oil import bill. Resultantly, trade deficit is expected to stay around $14.3 billion, compared to $15.2 billion this year.

Workers’ remittances were projected at $7.7 billion, compared to this year’s $6.6 billion.

An expected increase in remittances and trade deficit at $14.3 billion, the current account deficit is expected to stay around $12.7 billion or 7.2 per cent of GDP, compared to this year’s $14.1 billion or 8.3 per cent of GDP.

The services sector will continue to be the main contributor to the GDP growth and is expected to grow by 6.1 per cent against this year’s 8.2 per cent. This will be achieved through growth rates in sub-sectors of the services sector: transport, storage and communication (4.5 per cent), wholesale and retail trade (5.4 per cent), finance and insurance (12 per cent), ownership or dwellings (3.5 per cent), public administration and defence (four per cent) and social community and personal services (seven per cent).

The manufacturing sector is expected to grow by 6.1 per cent, compared to this year’s 5.4 per cent. The mining and quarry sector is projected to grow by five per cent based on 7.6 per cent increase in extraction of natural gas, 1.9 per cent in crude oil, 15.2 per cent in coal, 3.5 per cent in limestone and seven per cent in rock salt.