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 5. TRADE  6. GULF



June 17 - 23, 2002


Pakistan's economy showed mixed trends during the outgoing financial year 2001-2002, achieving a 3.6 per cent GDP growth but witnessing a decline in revenues, exports, fixed investment, wheat, rice and cotton crops.

Finance Minister Shaukat Aziz, who released the Economic Survey 2001-2002 on Thursday at a news conference, claimed that despite continued drought conditions and the Sept 11 and Dec 13 events of last year, the economy "has shown resilience" and could withstand any local or external pressure.

The real GDP has shown a humble recovery at 3.6 per cent when compared with the revised target of 3.3 per cent and the previous year's 2.5 per cent.

According to the finance minister, the better 3.6 per cent growth was possible due to 1.4 per cent, 4.4 per cent and 5.1 per cent growth in agriculture, manufacturing and services sector, respectively. Had there been no effect of drought, the GDP growth could have been 4.7 per cent as against the target of 4 per cent in 2001-2002, he said.

According to the Survey, the domestic and foreign debt has shrunken, investment climate improved and budget deficit target achieved. The Gross National Product during the current financial year grew by 5.4 per cent as against 2.5 per cent recorded a year earlier. When translated into volume terms, the GNP stood at $65 billion.

Inflation rate, as measured by consumer price index, stood at 2.6 per cent during July-April as against 4.7 per cent in the corresponding period of last year. "This 2.6 per cent inflation is the lowest in three decades," the finance minister claimed.

Major crops registered a negative growth of 0.5 per cent in 2001-2002, while minor crops grew slightly by 1.0 per cent. Wheat production was estimated at 18.475 million tonnes as against 19.024 million tonnes of last year, showing a decline of 2.9 per cent. Likewise, rice production was estimated at 3.882 million tonnes in 2001-2002 as against 4.803 million tonnes of 2000-2001, thus showing a decline of 19.2 per cent.


The government has fixed the price of seed cotton (phutti) grade III at Rs800 per 40 kg against the current year's price of Rs780 per 40 kg and asked the Trading Corporation of Pakistan to maintain this price level through procurement.

Announcing this at a news conference on Wednesday, Commerce Minister Abdul Razak Dawood said that duty-free import and export cotton policy adopted last year would continue in the next year.

The seed cotton for which price has been fixed is required to be of minimum staple length of 1-1/32" and micronaire of 3.8 to 4.9 NCL.

The next year's cotton yield target has been lowered to 10.1 million bales as against 10.9 million bales of the current year due to the drought conditions.


Inflation based on Consumer Price Index (CPI) soared by 4.15 per cent during the period July-May of 2001-02 compared to the same period of previous year, says the price data released by the Federal Bureau of Statistics (FBS) on Wednesday.

The CPI index, starting at 100 in July 2001, consequently rose to 104.15 during the first 11 months of the current financial year.

The Sensitive Price Indicator (SPI), using 2001-02 as the new base and derived from the average of prices affecting four major economic strata, thus diluting the effect on the lowest- and lower-middle income groups, was shown to have risen to 103.43. This denotes an increase of 3.43 per cent in SPI during the current financial year so far.


Cotton trade gave a mixed reaction to the new cotton policy as it is claimed to be heavily tilted in favour of growers and spinners, leaving the other sectors at the mercy of counter market forces.

The major associations of growers were demanding that new season's procurement price should be fixed around Rs900 per 40 kg in line with the increase in inputs, including fertiliser and pesticides, dealers said, adding "the increase of Rs20 per kg though is modest, growers are expected to get more as the fall in acreage could well mean lower production in the new season."


The differences over the distribution of water have again surfaced between the Sindh and Balochistan provinces, with the latter seeking President's indulgence in a bid to save its Kharif crop from ruining.

Notwithstanding the fact that there has been a significant increase in rivers flow, the shortage of irrigation water is still far from over for the growers of Balochistan, an official told.

"Even on Wednesday, Balochistan received 3,405 cusecs less water from their allotted share," the source said.


The government has persuaded the donors to let it continue with around Rs11 billion subsidy to the fertilizer industry for another year.

A senior official told that under the conditionalities of the International Monetary Fund (IMF) and the World Bank, the government was required to withdraw Rs11 billion subsidy available to the fertilizer industry under the gas price rationalization plan.


Pakistan's water shortage ended on Saturday as the rivers' combined flow exceeded total withdrawal capacity of the provinces.

The provinces have started running their canals at their full capacity in view of the supplies touching a healthy 371,500 cusec mark. Saturday's inflow was factually 111,500 cusecs more than the total withdrawal capacity of the system that stands at 260,000 cusecs.