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Economy

Pakistan's industrial base is able to supply many of the country's needs in consumer goods, although production has slowed in recent years.
PTI | By HT Correspondent
UPDATED ON FEB 01, 2006 05:31 PM IST

Overview
Agriculture is the mainstay of Pakistan's economy, employing almost 50 per cent of the population. Wheat, rice, cotton, sugarcane, and tobacco are the chief crops, and cattle and sheep are raised.

Most of Pakistan's agricultural output comes from the Indus basin. The country is now self-sufficient in food, as vast irrigation schemes have extended farming into arid areas, and fertilizers and new varieties of crops have increased yields.

Pakistan's industrial base is able to supply many of the country's needs in consumer goods, although production has slowed in recent years.

The country's natural resources provide materials for such industries as textile production (the biggest earner of foreign exchange), oil refining, metal processing, and cement and fertilizer production. Remittances from Pakistanis working abroad constitute the second largest source of foreign exchange.

Since the mid-1950s electric power output has greatly increased, mainly because of the development of hydroelectric power potential and the use of thermal power plants.

Pakistan's chief imports are petroleum, machinery, transport equipment, chemicals, and edible fats and oils.

The chief trading partners are the European Union nations, the United States, Japan, and China. In the late 1990s, following years of lax fiscal policies, Pakistan appeared on the verge of bankruptcy, with a foreign debt of over $30 billion.

Concern

Ringing alarm bells over increasing numbers of poor and unemployed in Pakistan, the country's state bank said recently, the level of poverty rose to 33 per cent from 20 per cent in the last 15 years, even though the economy looked up with a growth rate of 5.1 per cent. The performance of public companies and poverty reduction strategies are areas of continuing concern.

Trends

Pakistan's economy in fiscal 2002-3 demonstrated strong resilience in the face of a continuing global economic downturn. The global recession was fueled by hikes in oil prices in the wake of the Iraq war, an outbreak of SARS in the Asia-Pacific region, and the continuing sluggish performance of US markets.

Despite these challenges, Pakistan managed to register a 5.1% GDP growth rate and attained significant macroeconomic stability, reports said.

The manufacturing and agricultural sectors emerged as the main engines of growth, experiencing 7.7 per cent and 5.8 per cent growth rates respectively over the year.

Manufacturing growth was led by a sharp increase in automobile production, while the best agricultural performers were rice and wheat.

In addition, a number of trends in the macroeconomy revealed positive signs of Pakistan's economic performance.

Foreign exchange reserves touched $10.5 billion; four billion dollars were added to the reserves over the last one year.

Pakistan secured over $800 million of foreign direct investment over the fiscal year. Per capita income increased by 17.4 per cent over the fiscal year. It constitutes a significant step towards achieving a higher standard of living.

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