Despite challenging economic environ-ment the telecom sector performed relatively bette

The economy of Pakistan showed modest recovery  during  FY2012  and  performed better  than  last  year.  The  GDP  growth  has been  estimated  3.7  percent  during FY2012  compared  to  3.0  percent  previous year.  Growth  in  FY2012  was  primarily driven  by  consumption  expenditure whereas  investment  in  the  country remained  low  at  12.5  percent  of  GDP. In order  to  achieve  sustainable  growth  in  the medium  term,  it  is  important  to  revive investment.  Persistent  inflation  in  the double  digit  for  the  last  five  years  is  due  to continued  fiscal  borrowings;  in  FY2012 fiscal  borrowings  from  the  scheduled banks increased by 50 percent, resulting in  crowding  out  of  lending  to  private sector.  The  services  sector  of  the  economy showed  a  growth  of  4.0  percent  during FY2012  compared  to  4.5  percent  a  year earlier. The growth in manufacturing has been  estimated  at  3.6,  which  is  higher than  last  year’s  3.1  percent.  Agriculture sector  also  performed  better  with  a  growth of 3.1 percent as compared to  2.4 percent growth  in  FY2011.Inflows  of  foreign  remittances  have reached  US$  13  billion  during  FY2012, showing  a  healthy  growth  of  16  percent from  previous  year.  Significant  inflow  of remittances  also  contributed  in  keeping the  current  account  deficit  to  US$  4.5 billion  despite  large  trade  deficit.  The imports  in  the  country  during  FY2012 increased  to  US$ 40 billion due to  heavy imports  of  petroleum  and  fertilizer whereas  exports  remained  US$  24.7 bi l l ion  during  the  year.  For  fiscal consolidation,  government  continued  its efforts  to  increase  the  tax  base  and simplification  of  tax  structure  in  the country.  Resultantly,  Federal  Board  of Revenue collected Rs. 1608 billion during July-May  2012.  In  order  to  revive  the growth momentum and investment  in  the economy,  comprehensive  and  credible reforms  are  required  primarily  in  the energy  and  fiscal  sectors.Despite  challenging  economic  environ-ment in  the  country, the  telecom  sector of Pakistan  performed  relatively  better  and most  telecom  indicators  showed  positive growth.  Total  teledensity  crossed  71.7 percent at the end of June 2012, telecom revenues reached Rs. 411 billion showing a  growth  of  11  percent  over  FY2011, broadband subscribers crossed the mark of  2.1  million  and  cellular  subscribers reached  120  million at  the  end  of  FY2012. Nevertheless, investment  remained  low  in the sector and only US$ 240 million were invested  during  the  year  compared  to  US$ 493  million  in  FY2011  as  basic  telecom infrastructure  in  the  country  has  been laid  down  by  the  telecom  operators.

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