Pakistan has emerged as one of the fastest growing economies in the Asian region with an average growth of 7 % in the last four years, Advisor to Prime Minister on Finance Dr Salman Shah told a World Bank delegation. He had a detailed discussion with the delegation led by World Bank Managing Director Graeme Wheeler, according to an official statement. Welcoming the delegation, the Adviser briefed them about various aspects of Pakistan economy. He said that the GDP in the last seven years has almost doubled and has increased to $ 130 billion and per capita income has also increased to US $ 847. Shah informed the delegation that almost 55% of the population was under nineteen, with a great potential for manpower advantage and growing consumer markets. This represented an attractive market for foreign investment. He said that the performance of the stock market over the last six years was really remarkable. It was much better than most stock markets in the emerging markets. Shah said that Pakistan is an investment friendly country as it has offered the most attractive and beneficial package to both the national and foreign investors. The Adviser said that due to these policies, the portfolio and foreign direct investment was rising every year. He said that consistency and continuity of polices has restored the confidence of the investors in Pakistan s economy. Shah informed the delegation in detail about the major economic reforms undertaken in Pakistan over the last seven years including deregulation, liberalization and privatization. He said that government policies have led to a significant reduction in unemployment and poverty. He referred to improvement in Pakistan s international credit rating. He said that Pakistan has made a successful return to the international capital market through the issuance of Sovereign Bonds-the most recent ones are 10 year and 30 year Bonds in March 2006. The Adviser stated that the government has succeeded in reducing budget deficit from an average of 7.0 % of the GDP to 2.5-1.0 % range. Exchange rate has remained stable despite widening of trade deficit, which clearly suggests that inflows are strong in the economy, he said. On inflation, the Adviser said that the tightening of the monetary policy by the State Bank of Pakistan has resulted in the sharp decline in core inflation, which has decelerated to 6.6% in the first quarter of the current fiscal year from an average of 9.2% in the same quarter last year. In fact, core inflation decelerated to 6.2% in September 2006 as against 9.6% in the same month last year. On the widening of trade and current account deficits, the Adviser pointed out strong economic activity encouraged the imports of machinery, raw material and capital goods, which grew at an extraordinary pace. Rising price of POL products also played a major role in raising import bill and accordingly widened the trade and current account gap. This phenomenon is changing in the current fiscal year as import growth has slowed to the average of 14% in the first quarter of the year. Shah said that a strong and sizeable middle class was emerging and the increase in demand of electronics, automobiles and phones were an indication of it. The Adviser underlined the strategic location of Pakistan which was surrounded by a booming East Asia, an energy surplus Central Asia, and a capital rich Middle East. He hoped that Pakistan would soon become West Asia s trade, energy and transport corridor. He said that the Gwadar port will be linked through northern areas with China and would emerge as a center of trade and investment activity. Shah also dwelt upon the second generation economic reforms and the privatization of the sectors like communications, oil and gas, financial institutions and power sector.
