the statement said.
It added that the growth is on course to surpass the last fiscal year’s FY14 outcome of 4.1 percent. The International Monetary Fund also forecasts the real GDP growth to reach 4.3 percent in FY15.
“After growing by 2.2 percent in July-January FY15, large-scale manufacturing is likely to gain traction due to recent cut in policy rate and low prices of raw materials that could boost the manufacturing sector,” the statement said. “In the agriculture sector, improved outcomes in major kharif crops (cotton and rice, in particular) and incentives in place along with favorable weather conditions for rabi season wheat crop, GDP growth is expected to be higher than that of FY14.”
The central bank said external sector outlook continues to improve on back of foreign exchange inflows and lower oil price despite subdued exports performance.
“Government’s efforts to contain the fiscal deficit have been on track in the first half of FY15, despite slightly slower growth in revenue collection,” it added. “With strong workers’ remittances and declining import growth, current account deficit has shrunk in Jul-Feb period of FY15 as compared to same period last year.”
The bank said nonetheless, with lower price impact in imports and multilateral inflows on track, the external sector outlook remains stable. “This is most visible in the stability in foreign exchange market and in an upward trajectory in foreign exchange reserves.”
It said during July-February FY15 period, net domestic assets decreased and net foreign assets increased, which is a welcome development in contrast to the trends in the same period last year.
“The year-on-year growth in broad money (M2) by February 27, 2015 was 11.5 percent; lower than the average growth of 13.6 percent in the past five years,” it added. “This deceleration is largely due to contraction in net domestic assets of the banking system.”
Growth in credit to private sector during July-February FY15 has also remained subdued at Rs158.9 billion compared to Rs298.3 billion in the same period of FY14.