ISLAMABAD (Khaleej Times) — The National Economic Council (NEC), Pakistan's highest decision-making body on economic issues is meeting here on May 31 to discuss rising inflation, poor exports, slow down in imports, and the widening current account deficit.

According to an official summary to be discussed in the NEC meeting, 7.5-8 percent gross domestic product (GDP) growth for 2007-08 has been projected due to what it claimed strong pick up in domestic and foreign direct investment and strong performance of agriculture, manufacturing, and service sector.

"The prospects for sustained high economic growth in 2007-08 would remain excellent", summary said also made available to this correspondent. It further said that GDP growth for 2005-06, provisionally assessed at 6.6 percent is likely to go up to about 7.0 percent in the revised estimates.

"Strict vigilance needs to be kept on money expansion to contain inflation to the annual target", the summary warned adding that the major taxes collected by CBR showed a comfortable position on government revenues and on the basis it is expected that the full year revenue target would be achieved.

The trade gap though has been widened to higher level but foreign inflows also recorded equally similar growth to bridge the gap. "The only disturbing aspect of the current year's performance is export growth which needs to be closely analyzed for redressal of its problem, as this is important driving force of the country's economy, having impact on the overall economic performance", the summary added. In this regard, it said that Pakistan's first Export Plan to increase exports to 15 percent of GDP from current level of 12-13 percent by 2013 has been conceived proposing ways and means to accelerate the pace of exports growth.

The summary also conceded that slowdown has been witnessed in import growth especially those related to production and export process which is textile machinery and iron & steel.

"Current account deficit is likely to surpass the Annual Plan target of $6.3 billion, as it has already amounted to $4.4 billion during July-December 2006".

GDP growth for the year 2006-07 is estimated to be 7.0 percent on the basis of preliminary assessment of agriculture growth and large scale manufacturing (LSM).

Taking into account the growth objectives, containing inflation and likely behavior in the external sector, the Credit Plan for the 2006-07 envisaged 13.46 increase in money supply. This was based on GDP growth target of 7.0 percent and inflation rate target of 6.5 percent.

Net domestic assets were estimated to growth by Rs450.1 billion or 13.2 percent. Credit Plan target for the private sector was set at Rs390.0 billion. "The net foreign assets of the banking sector system were envisaged to exert an expansionary effect to the tune of Rs9.8 billion".