Financial performance in FY11 – Alfalah Securities Limited

Karachi: The government has missed major macro economic targets set for the outgoing fiscal year with GDP growth recorded at 2.4% in FY11 against the target of 4.5% which was 3.8% last year and fiscal deficit stood at 5.1% against actual target of 4%, according to Pakistan Economic Survey for 2010-11.

According to Alfalah Securities Limited, the major causes of the slackness in performance can be attributed to the devastating floods in 2010, deteriorating security situation and increase in oil prices in the international market. The economy witnessed a decline in investment from 15.4% of the GDP in FY10 to 13.4% in FY11, mainly due to high interest rate and deteriorated law & order situation in the country. The average CPI inflation from July-May 2010-11 was reported at 14% with 10% core inflation.

Agriculture Sector: The growth in the agriculture is estimated at 1.2% on the back of 3.7% growth in the livestock sector. Major Crops constituting 31.1% of agricultural value added registered negative growth of 4.0% compared to a negative growth of 2.4% last year and a target of 3.7%.

Manufacturing Sector: Output in the manufacturing sector witnessed expansion of 3% in 2010-11 as compared to expansion of 5.5% last year on the back of strong performance from small and medium manufacturing sector Large-scale manufacturing grew by 0.98 % (July-February 2010-11 incorporated in the national accounts but the growth is now 1.7 % in July-March 2010-11) as against 4.9 % of last year.

Services Sector: The services sector grew by 4.1% against the target of 4.7% and actual outcome of 2.9 %. Within services sector wholesale and retail trade sector grew at 3.9 % as compared to 4.6 % last year and the target for the year of 5.1 %. Finance and insurance sector recorded negative growth of 6.3 % in 2010-11 as against contraction of 11.3 % last year.

Exports USD24bn estimated: The country’s exports are projected to be $24 bn for the current fiscal year indicating a good sign for the economy. The exports rose to $ 20.2 bn in July-April against $ 15.58 bn in the same period last year. This high growth in exports pertains to major contribution by the textile and food sectors contributing to 61.8% and 18.1% respectively. The growth in food sector exports was a result of high unit prices and export quantity increases which contributed to $ 794.6 mn to the overall exports.

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