Highlights of PMEAC's Economic Outlook 2012-13

Prime Minister's Economic Advisory Council's (PMEAC) Economic Outlook 2012-13

Growth

- GDP is likely to grow at 6.7% in 2012-13.
- Agricultural GDP is expected to grow at 0.5% due to weak monsoon.
- Manufacturing sector is projected to grow at 4.5%. Electricity, automotive, steel and cement sector have shown improvement in the period of April-June. Because of the benefits of the low base, manufacturing sector will show improved performance in the second half of this year.
- Mining sector is expected to grow at 4.4% due to growth in the coal and lignite sector, and some recovery in iron ore.
- Electricity generation expected to continue to grow at an average pace of around 8%.
- Service sector is projected to grow at 8.9%.
- Gross Domestic Fixed Capital Formation (Investment) as a proportion of GDP has fallen from its highest level of 32.9% in 2007-08 to 30.4% in 2010-11 and to 29.5% in 2011-12. For 2012-13, it is expected to be at 30.0% of GDP.
- Domestic saving rate has declined from 32.0% of GDP in 2010-11 to 30.4% in 2011-12 and is projected to be at 31.7% GDP in 2012-13.

External Sector:

- Current Account Deficit was USD78.2bn (4.2% of GDP) in 2011-12 and is expected to be at 67.1bn (3.6% of GDP) in 2012-13.
- Trade deficit was USD189.8bn (10.2% of GDP) in 2011-12 and is expected to be at USD181.1bn (9.7% of GDP) in 2012-13.
- Capital flows were USD67.8bn (3.7% of GDP) in 2011-12 and is projected to be at USD73.2bn (3.9% of GDP) in 2012-13. Build up to Forex Reserves is projected at USD4bn in 2012-13.

Inflation:

- Inflation rate is expected to be within the range of 6.5 to 7.0% at the end of 2012-13.

Measures needed to accelerate growth:

- Permitting FDI in multi-brand retail.
- FDI and other reforms in the Aviation sector.
- Suitable increase in the price of diesel in one or more steps.
- Cap on the level of consumption of subsidized domestic LPG.

Source : Equity Bulls

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