Survey
* Your assessment is very important for improving the workof artificial intelligence, which forms the content of this project
* Your assessment is very important for improving the workof artificial intelligence, which forms the content of this project
economicletter a weekly publication of The Institute of Bankers Pakistan Pakistan The World Bank expects GDP growth to rise to 3.9% in 2011-12 and further to 4.2% in 2012-13 after having slowed down to 2.4% in 2010-11 against 4.1% in 2009-10. The Asian Development Bank is to provide a credit line of $ 513 mn of which $ 270 mn would be utilized for building Khanki barrage at a new site on river Chenab in the Punjab while $ 243 mn would be used for improving infrastructure in the power sector. The SBP expects home remittances to reach a level of $ 13 bn or more in the current fiscal ending June 2012 against received $ 12 bn last fiscal. The remittances at $ 6.3 bn during July-December 2011 are already higher by 19.54% over the same period of 2010. According to SBP, liquid foreign exchange reserves as on January 13, 2012 stood at $ 16.902 bn of which $ 12.688 bn was held by the SBP and the rest with banks. According to SBP, net inflow of foreign investment during July-December 2011 fell by 63.6% over the same period of 2010 to $ 386.1 mn against $ 1.06 bn. Of the total, foreign direct investment was lower by 36.7% to $ 531 mn against 839.6 mn during the above periods. Foreign portfolio investment was lower by 165% with an outflow of $ 144.6 mn during July-December 2011 against an inflow of $ 221.5 mn in the same period of 2010. According to SBP, the current account posted a deficit of $ 2.15 bn in the first half of the current fiscal against a surplus of $ 8.0 mn in the same period last fiscal, with the trade deficit widening by 38.48% to $ 11.47 bn and home remittances rising by 19.54% to $ 6.32 bn (the two major components of the current account) during the above periods. According to SBP, monetary expansion in the first half of the current fiscal was recorded at 6.96% against 8.97% in the same period last fiscal. Net foreign assets inflow was negative to the tune of Rs 130 bn against positive Rs 126 bn in the same period last fiscal. Private sector credit off-take during July-December 2011 was higher at Rs 193 bn against Rs 163 bn in the same period of 2010. According to SBP, cash recovery of non-performing loans (NPLs) by banks and DFIs fell to Rs 13.779 bn in the third quarter of 2011 against 17.237 bn in the second quarter of the year, a decline of 20%. The National Highways Authority has awarded a Rs 24.93 bn contract to a Malaysian company to build the Karachi-Hyderabad Motorway on the basis of build-operate-transfer (BOT) over a three years period. The government is considering to adopt the World Bank’s Disbursement Link Indicators (DLI) mode of financing by making projects fast-track for early releases. The DLI mode of financing is a combination of project and program financing releases which is made upon implementation of agreed indicators of the project. This would lead to mitigate the impact of program lending and budgetary support. The Pakistan-Afghanistan Joint Economic Commission have agreed to promote bilateral trade from the current volume of $ 2.5 bn to $ 5.0 bn by 2015 through greater participation of the private sector of the two countries. Tentative private sector estimates suggest that wheat cropped area in the ongoing rabi season may have fallen short by 2-2.5% over the previous crop season’s 8.9 mn hectares which may result in total output to be lower at 23 mn tons against the target of 25 mn tons set at the beginning of the season. >> Markets at a glance Weekly Review KIBOR (6months) Bid % Offer % Foreign Exchange Rates GBP (£) Euro (€) USD ($) KSE 100 Index Gold Rate (10gm) Beginning 11.68 11.93 Rs 138.39 Rs 114.94 Rs 90.24 11,027 Rs 48,428 Ending 11.68 11.93 Rs 138.86 Rs 115.87 Rs 89.99 11,743 Rs 48,514 Change 0 0 + 0.47 + 0.93 - 0.25 + 716 + 86 Volume 7, Issue No. 3 | January 20, 2012 a weekly publication of The Institute of Bankers Pakistan The government is to auction five licenses including 3G/4G spectrums in March with an estimated revenue of $ 800 mn. Total consumption of petroleum products (ex non-energy) in the first half of the current fiscal rose by 2.2% over the same half last fiscal to 9.87 mn tons. International According to the U.N. Food & Agriculture Organization (FAO), food prices globally averaged higher in 2011 by about 35% over 2010, highest single year rise since the early 1970s. China’s foreign trade in 2011 stood at an all-time high at $ 3.6 trillion but the trade surplus was lower at $ 155 bn in the year against $ 183 bn in 2010. With economic growth slowing both in the U.S. and Europe, the country proposes to put in place measures to boost its trade volume by about 10% in 2012. Inflation in China, measured by the consumer price index (CPI), was recorded at 5.4% in 2011 against the government target of containing it at 4% or less and higher against the level of 3.3% in 2010. It had peaked at 6.5% in July last year. The central banks of China and the United Arab Emirates have signed a currency swap agreement worth 35 bn yuan ($ 3.54 bn) valid for three years. The Chinese government has placed the country’s GDP growth in 2011 at 9.2% against 10.4% in 2010. Saudi Arabia and China have signed several memorandums of understanding (MoUs) including building of a petrochemical plant in Tianjin and a nuclear energy power plant in the Kingdom for civilian use. Saudi Arabia is the largest single supplier of crude oil to China accounting for 11% of total Chinese imports. Bilateral trade in the first eleven months of 2011 between the two countries stood at $ 58.5 bn. Saudi Arabia has signed a deal worth 30.8 bn riyals ($ 8.2 bn) with a Spanish government-led consortium to build a railway line to connect Mecca and Medina, the two holiest cities in the Muslim world, with the port city of Jeddah. Japan has signed a deal to import natural gas from Australia worth $ 34 bn with supply scheduled by end-2016. South Korean central bank has left its key lending rate unchanged for the seventh straight month at 3.25%. GDP growth in Russia in 2011 was recorded at 4.2% against 4.0% in 2010. Despite a capital outflow of $ 84 bn last year, the country yet ended 2011 with a budgetary surplus of 0.8% of GDP. Inflation at 6.1% in 2011 was lowest for 21 years. Standard and Poor’s, an international credit rating agency, has cut by a notch the sovereign rating of France, second largest economy in the 17-ation eurozone area after Germany, from “AAA” to “”AA+”. Moody’s Investors Services has reaffirmed France’s credit rating as “AAA”. Fitch has downgraded Russia’s outlook to “stable” from “positive” but has reaffirmed the country’s long-term debt at “BBB”. The downgrade has been cited as due to political uncertainties and capital outflows. Standard and Poor’s has downgraded the European Financial Stability Facility (EFSF) by a notch from “AAA” to “AA+”. Unemployment in Britain at end-November 2011 stood at 8.4% of workforce (2.68 million people), highest for 17 years. U.S. trade deficit in November 2010 stood at $ 47.8 bn against $ 43.3 bn in October of the year. Exports rose by 1.3% to $ 225.6 bn while imports fell by 0.9% to $ 177.8 bn during the above periods. Editor: Syed Mahdi Mustafa Published by: The Institute of Bankers Pakistan, M.T. Khan Road, Karachi 74200, Pakistan Phone: (021) 35689718, 35680783 | Fax: (021) 35683805 | Email: [email protected] | Website: www.ibp.org.pk General Disclaimer: IBP Weekly Economic Letter is based on information obtained from local and international print and electronic media. IBP has not verified this information and no warranty, expressed or implied, is made that such information is accurate, complete or should be relied upon as such. In no circumstance IBP and its team members would be liable for any incidental or consequential damage that may incur from the use of information contained in IBP publication(s). Volume 7, Issue No. 3 | January 20, 2012