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.