Boston, MA -- (ReleaseWire) -- 03/17/2014 -- We have downgraded our full-year real GDP growth forecast for Pakistan for the current fiscal year (FY2013/14 [July-June]) to 3.4% from 4.0% previously, as the macroeconomic environment readjusts painfully due to a general tightening in fiscal and monetary policy. We continue to believe that this tightening in policy is necessary in order to correct the significant structural imbalances in the economy, which should eventually put the economy on a much stronger footing and thus higher growth trajectory over the medium-to-long term. As such, while we have revised our near-term growth expectations, we have kept our FY2014/15 growth forecast at 4.0%, which implies a strong bounce in economic activity following this year of transition.
Our recent downgrades centre on lowering our growth expectations for domestic private demand, namely private consumption and gross fixed capital formation growth. While the revisions made were fairly marginal, they have had a notable impact on the headline rate of growth as domestic demand makes up the lion's share of the Pakistani economy, equivalent to approximately 111% of GDP over the past five years.
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We have lowered our projections for private consumption and gross fixed-capital formation growth to 2.0% and 1.5%, from 2.8% and 2.0%, respectively. The consequent downward revision in our import growth forecast as domestic demand weakens, however, provided a slight statistical cushion for headline growth.
While these economic headwinds continue to circle at present, the impact on Pakistan's freight industry will be that growth is set to be muted during 2014 across all modes. The outperformer in terms of annual tonnage growth will be maritime, with both the ports of Karachi and Muhammad Bin Qasim expected to witness 2.40% year-on-year (y-o-y) increases this year.
Headline Industry Data
- 2014 tonnage throughput at the Port of Karachi is forecast to grow by 2.40% to 39.44mn tonnes.
- 2014 tonnage throughput growth at the Port of Muhammad Bin Qasim is forecast to increase by 2.40% to 25.46mn tonnes.
- 2014 air freight tonnage forecast to grow by 2.30% to reach 320,000 tonnes.
- 2014 rail freight tonnage forecast to increase by 2.00% to hit 2.79mn tonnes.
- 2014 total trade (real terms) forecast to rise 11.00%.
Key Industry Trends
Railways Ministry Places Order To CSR Ziyang For 50 Locomotives
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