Real GDP grew at a robust rate of 4.1 percent in FY 2007-08 as
against the revised estimates of 6.8 percent last year. When viewed in the backdrop of major disruptions of extraordinary nature, economic growth in 2007-08 appears satisfactory. In the mediumterm horizon, the real GDP has grown at an average rate of 7.0 percent per annum during the last five years (2003-08). Unlike last year, the growth for the year has not been broad-based as the performance of agriculture and manufacturing have been far from satisfactory. Agriculture grew by 1.08 percent at the back of a negative (-6.4 percent) growth in major crops. Livestock, which accounts for 52 percent of agriculture also failed to lift the growth in agriculture as it posted a modest growth of 4.2 percent. Major crops and livestock, contributing 84.8 percent to agriculture, could not provide enough support to record a decent growth. The performance of the manufacturing sector remained subdued as it was hit hard by domestic and external factors. The overall manufacturing sector recorded a modest growth of 4.8 percent as against 8.3 percent last year. Accordingly, its contribution to this years growth declined to 18.5 percent. Large-scale manufacturing, accounting for 70.0 percent of overall manufacturing, suffered from a variety of factors including political instability, frequent eruptions of incidents detrimental to law and order and resulting in loss of working hours, incidence of violence causing damage to property and forcing industries to remain closed for many days, power shortages preventing industries from operating at their capacity level, and higher energy and capital costs. Accordingly, large-scale manufacturing recorded feeble growth of 4.0 percent, down from 8.7 percent last year. This years real GDP growth was powered by stellar growth in the construction and banking and insurance sectors, growing by 12.9 30
percent. The on-going reforms in the banking and financial sector
have made this sector highly attractive to foreign investors. This sector has been growing at an average rate of 23 percent per annum over the last five years. Maintaining its past trend, electricity and gas distribution registered a negative growth of 22.0 percent in FY 2007-08. The services sector continued to perform strongly for the fourth year in a row with 6.6 percent growth in FY 2007-08. This sector has grown at an average rate of 7.3 percent per annum over the last five years. Major contributors to this years services growth include: wholesale and retail trade, banking and insurance and social services. c) Per Capita Income Per capita income is treated as one of the foremost indicators of the depth of growth and general well-being of any country. Per capita
income, defined as Gross National Product at current market price
in dollar terms divided by the countrys population, has grown at an average rate of above 13 percent per annum during the last five years rising from US$586 in FY 2002-03 to US$921 in FY 200607 and further to US$1042 in FY 2007-08. Per capita income in dollar terms rose from US$921 to US$1042 in FY 2007-08 depicting an increase of 18.9 percent. Real per capita income grew by 0.3 percent as compared to 3.7 percent last year. The main factors responsible for the rise in per capita income over the years include: acceleration in real GDP growth, a stable exchange rate and a more than five-fold increase in the inflow of workers remittances. d) Consumption