STAFF REPORT IBD: The economy has shown modest improvements in first six months (July-December) of fiscal year 2011-12 because of the better performance of the agricultural sector, says the State Bank of Pakistan (SBP) in its second-quarter report on the state of economy.
However, ample availability of key staple crops and less-than-anticipated supply disruption due to the floods helped contain inflationary pressures in July-December of FY12.
According to the report, developments in the first half of FY12 indicated that risks to macroeconomic stability were stemming from the external sector and continued weaknesses on the fiscal side.
In terms of real sector, there has been some improvement since the publication of SBPs annual report in December 2011.
“The economy is still expected to grow in the range of 3 to 4 per cent. Inflationary outlook has improved slightly on account of supply-side factors (food),” the report said.
The report said in spite of the lower fiscal deficit in the first half, containing the overall deficit to its revised target of 4.7 per cent of gross domestic product (GDP) seems to be challenging.
According to the report, the burden of financing this deficit will fall on the banking system, specifically on commercial banks.