KARACHI: Pakistan's catastrophic floods means it will miss this year's 4.5 per cent gross domestic product (GDP) growth target this year though it is not yet clear by how much, a finance ministry official said on Tuesday.
The International Monetary Fund (IMF) said on Monday the floods, the worst in 80 years, will cause major economic harm as donor and investor concerns grow over the disaster's impact on an already fragile economy.
“It is too early to say the extent of damage and loss of crops. But yes, it is a major catastrophe and it will have a negative impact on economic growth,” said Finance Ministry spokesman Asif Bajwa.
The government said it was assessing the damage but it would be substantial, especially in the agriculture sector which accounts for more than 21 per cent of GDP and employs 45 per cent of the labour force.
An economic growth target of 4.5 per cent in the 2010/11 (July-June) fiscal year would have to be revised downwards once the extent of the damage was known, he said. Growth was 4.1 per cent last year.
The government had to turn to the IMF in November 2008 for emergency financing of $11.3 billion. It has since struggled to meet Fund guidelines and is expected to have missied a target for the fiscal deficit for the quarter ending on June 30.
Pakistan and IMF officials are due to meet on Aug. 23 to discuss a sixth tranche of the loan and Bajwa said the IMF could provide more fiscal space in light of the floods.
The floods, triggered by unusually heavy monsoon rain over the upper Indus river basin over the past 10 days, have ploughed a swathe of destruction more than 1,000 km (600 miles) long from northern Pakistan to the south, killing more than 1,600 people and making two million people homeless.
After touching a near one-month low on Monday on concerns over the economic impact of the flooods, the main index was barely changed on Tuesday in extremely thin trade as most investors stayed on the sidelines. – ReutersIf you want to follow news on your mobile, click on http://dawn.com/mobile/ and download Pakistan's first mobile news application.
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