After passing through a difficult time in the year 2008-09, Pakistan economy is back on recovery path as indicated by the macroeconomic indicators for the first half of the fiscal year 2009-10. All macroeconomic indicators show positive sign except the budget deficit target, which was exceeded by a small margin. The exchange rate remained stable and international reserves position has strengthened during the first half of the fiscal year 2009-10.
Economic growth in Pakistan has started recovering due to improvement in large scale manufacturing sector’s output resulted from improvement in global economy which has helped manufacturing export growth. However the growth recovery prospects also enclosed few risks and challenges including the security situation, power shortage, the drop in overall volume of trade and poor tax growth. A revenue shortfall and delays in disbursements of pledged donors support have complicated the fiscal management. Economic mangers of the country intend to introduce the VAT in the second half of the fiscal year 2010 which may recover the revenue shortfall1. Country’s engagement in war against terrorism has resulted in additional expenditures, putting pressure on federal budget. Consequently, the budget deficit for first quarter of the fiscal year 2009-10 has been reported 1.5% of GDP as compare to 1.1% in the first quarter of last year.
Unprecedented surge in inflation (CPI) remained the concern of economic mangers which has been contained in the year 2009-10 to some extent. CPI inflation dropped to 8.9% however, it went back to 10.5% in November 2009. As a leading economic indicator, this shows growth inflationary pressures in the economy. It is estimated that inflation may accelerate in the second half the fiscal year 2009-10 due to higher international commodity process and lower than anticipated receipts. It is estimated by State Bank of Pakistan that GDP growth for the fiscal year 2009-10 would be around 3.3%, higher than the previous year’s growth of 2.0%. Services sector would major contributor in this growth while improvement in industrial output is also expected in the year 2009-10. Average inflation is expected to be within the range ofl0-12%asagainstthetargetof9%2.
Telecom sector too appears to be on the path of recovery after slow growth in the year 2008-09 due to slow down in the economy. The growth of teledensity remained topsy-turvy in the year 2008-09 where teledensity continued to decline from June 2008 to December 2008 (3.5 to -0.5%) and picked up again in June 2008 and reached at 2.6% in June 2009. Total teledensity declined again in the first of quarter of the fiscal year 2009-10 however it stated picking up in the second Quarter of the same year. The decline in teledensity the first quarter of 2009-10 is attributed to decline in cellular mobile numbers by major operators, Mobilink and Ufone, who dropped their numbers due to some definitional changes. PTCL also reported decline in fixed line subscribers during the period which caused decline in overall teledensity. PTA provided a uniform definition of active subscribers to all operators for reporting purpose where all have compliance to thisdefinition.
Quarter of the same year. The decline in teledensity the first quarter of 2009-10 is attributed to decline in cellular mobile numbers by major operators, Mobilink and Ufone, who dropped their numbers due to some definitional changes3. PTCL also reported decline in fixed line subscribers during the period which caused decline in overall teledensity. PTA provided a uniform definition of active subscribers to all operators for reporting purpose where all have compliance to this definition.
Total teledensity of the country is up and reached to 63.5% in December 2009 which was 62.1 % in June 2009. During the first two quarters of the fiscal year 2009-10, teledensity has increased by about 1.8% in overall. Mainly the rise has been witnessed in WLL density which grew by 6% while the cellular mobile teledensity grew by 2.2% in the first two quarters of the fiscal year 2009-10. However, the fixed line teledensity remained unchanged during the first two quarters of the fiscal year 2009-10. Main reason for slow down in the pace of tedensity could be attributed to the maturity of market where operators’ efforts are now on retention policy instead of expansion of subscribers.
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