Leading Issues in the Economy of Pakistan: Agenda for Reforms Table 2.1: State of the Economy in 2017-18 1. GDP Growth Rate(%) 6.0 By Sector Agriculture 4.0 Industry 4.5 Services 6.3 By expenditure Household consumption expenditure 6.2 Private Investment 4.4 Public Investment 28.3 Exports of goods and services 12.6 Imports of goods and services 17.7 2. Rate of Inflation(%) Consumer Price Index 3.9 ‘Core’ Inflation 5.9 3. Monetary Statistics SBP Policy Rate(%)** 6.5 Exchange Rate(Rs/$)** 118.90 Real Effective Exchange Rate 107.48 (2010= 100) Index *With base year of 2005-06|** End of year Source: PES| SBP| MOF 4. Balance of Payments($ billion) Current Account Exports of goods Imports of goods Trade deficit Financial Account Others Balance of Payments Level of Reserves (Months of import cover) 5. Public Finances (% of GDP)* Revenues Tax Revenues Non-Tax Revenues Expenditure Current Expenditure Development Expenditure Budget deficit Primary deficit -19.2 24.8 -55.7 -30.9 13.6 -1.1 -6.7 9.8 (1.6) 15.2 13.0 2.2 21.8 17.0 4.8 -6.6 -2.0 The economy exhibited some strong features in 2017-18. The GDP growth rate had risen to 6.0 percent, the highest after 2006-07. All economic sectors were showing buoyancy. The rate of inflation was very low at 3.9 percent, with food prices rising by only 2.8 percent. Total investment was buoyant, especially public investment due to the peak of investment in power generation. The SBP policy rate was relatively low at 6.5 percent in end-June 2018, close to the core rate of inflation. The exchange rate was Rs 118.90 per dollar, with a depreciation of 13 percent over the year. The currency was overvalued by 7.5 percent according to the real effective exchange rate. The real concern was the sustainability of the growth process. The current account deficit in the balance of payments had reached the all-time peak level of$19.2 billion, equivalent to 6.4 percent of the GDP. Foreign exchange reserves which stood at$17.6 billion at the end of 2016-17, were down to$9.8 billion, equivalent to under two months of imports. 26