Real Sector Large-scale manufacturing index grew sharply by 6 percent (year-on-year) in February 2012. Real GDP (fc) growth moderated to 2.4 percent in FY11 mainly due to lacklustre performance of industrial sector affected by infrastructural constraints and unfavourable law & order situation in the country.
Inflation (Calculated from price inndices with base year 2007-08 Headline CPI inflation (YoY) at 10.8 percent in March 2012 was slightly lower from previous month's level. The non-food non-energy (NFNE) measure of core inflation (YoY) recorded a slight increase in March 2012. WPI food inflation (YoY) declined to 10.7 percent in March 2012.
CPI Inflation (YoY) by Groups Decrease in headline CPI inflation (YoY) in March 2012 was primarily contributed by food group.
Balance of Payments Despite widening of trade deficit, the external current account deficit narrowed in February 2012 as improvement in current transfers offset some of the increase in trade deficit.
Trade A relatively higher increase in import payments than export receipts resulted into a widening of trade deficit in February 2012
Global Economy Most central banks maintained policy rates in their latest monetary policy review meetings. International commodity prices, except metals, sugar and gold, have shown an escalation in the month of March 2012.
Revenues, Expenditures and Fiscal Balances Fiscal deficit is recorded at 2.5 percent of GDP in H1-FY12.
Government Domestic Debt Government's domestic debt has increased by over Rs 1 trillion in FY12 so far.
External Debt Stock of external debt and liabilities decreased by $710 million in H1-FY12 mainly due to scheduled repayment to IMF.
Total Debt Increase in stock of total debt and liabilities in H1-FY12 was contributed by increase in domestic debt as well as exchange rate depreciation.
Monetary and Credit Aggregates Deceleration in broad money (M2) growth is primarily due to sharp contraction in NFA of the banking system. Growth in reserve money also decelerated due to significant contraction in NFA of SBP.
Credit to private sector businesses increased by only Rs 56.8 billion during July-February FY12 compared to a hefty increase of Rs 235 billion in the corresponding period of last year.
Money Market Volatility in overnight repo rate increased in FY12 (YTD) due to unpredictable liquidity flows in the money market. Banks' increased use of both SBP reverse repo and repo facilities reflects the volatile liquidity flows in the money market.
The yield curve has steepened since the last monetary policy decision mainly due to increase in long term interest rates. The decline in weighted average lending and deposit rates has slowed in the last couple of months.
Real Interest Rates Government has raised Rs 595billion in MTB auctions during Q3-FY12 against the targeted amount of Rs 575 billion
Foreign Exchange Market Pak rupee has depreciated by 5.15 percent against US dollar during 1st July 2011 to 13th April 2012. In real terms, PKR has appreciated by 1.9 percent during July-February FY12, mainly due to higher domestic inflation vis-àvis our trading partners and competitor countries.
Capital Market Stock market showed a strong performance with KSE-100 index registering 21 percent growth in calendar year 2012 so far.
Financial Soundness Indicators The inclination of scheduled banks to invest in government securities has increased their ratio of liquid assets to total deposits whereas the advances to total deposits has continued to fall.