Table 1.

2: Growth Performance of Components of Gross National Product

(% Growth At Constant Factor Cost)
2002- 2003- 2004- 2005- 2006- 2007- 2008-
1980s 1990’s
03 04 05 06 07 08 09
Services Sector 6.6 4.6 5.2 5.8 8.5 6.5 7.0 6.6 3.6
Transport,
Storage and 6.2 5.1 4.3 3.5 3.4 4.0 4.7 5.7 2.9
Communication

The Transport, Storage and Communication sub-sector depicted a sharp

deceleration in growth to 2.9 % in 2008-09 as compared to 5.7 % of last year.
Value added in this sector is based primarily on the profits and losses of
Pakistan Railways, Pakistan International Airlines and other airlines, Pakistan
Posts & Courier Services, Pak Telecom and motor vehicles of different kinds
on the road. Mechanized road transport has depicted a growth of 2.9 %,
followed by road transport (6.4 %), communication sector (3.6 %) and
storage (2.7 %). The value addition of Pakistan Railways has declined by 6.4
%. Other sectors that showed a decline are; air transport (2.1 %) and pipeline
transport (8.0 %).

Source: Economic Survey of Pakistan 2008-2009 – Chapter 01: Growth and

Investment – www.finance.gov.pk/admin/images/survey/chapters/01-
Growth09.pdf

Value addition in transport storage &

communication sector grew by 2.9 percent
during FY09, significantly lower than 4.5
percent target for the year. The higher
growth target for FY09 was set amid
prospects of continuation in buoyant
growth in communication and some
improvement observed in air transport by
the end of FY08.
However, communication sector (both
mobile and fixed line) exhibited a lower

than expected growth in FY09 and

prospects of positive contribution in value
addition from air transportation were also
not realized. Water and road transport also
could not keep up the pace of FY08. As a
result, overall transport, storage &
communication sector posted a weaker
growth during FY09 relative to target and
actual growth seen last year (see Table
2.19).

Transport and storage

VA in transport consists of aggregate of VA from air transportation, ports and shipping, pipelines
and mechanized and non-mechanized road transportation. In FY09, overall transportation posted
a growth of 2.7 percent, compared with 2.2 percent growth in FY08. VA in transport in FY08 was
held back due to sharp deceleration in water and road transport and a continued decline in
railways, airlines and pipeline transport (see Figure 2.40).

Aggregate cargo handling activities witnessed a marginal decline in FY09 as a sharp fall
in imports was largely offset by a strong surge in cargo handling of exports (see Table
2.21). While cargo

handling at KPT witnessed a slight increase, it fell at PQA during FY09. Specifically,
KPT handled cargo volume of 38.7 million tons in FY09, up by 4.4 percent. During
FY09, cargo handling at PQA dropped by 5.3 percent. It is important to note here that the
expansion in the existing port facilities as well as rising activities at Gwadar suggest that
the growth in water transport and storage would see strong growth going forward. In
addition, storage activities in FY09 were positively impacted by increase in warehousing
services for agricultural produce (mainly wheat, sugar and rice) and build up of fertilizer
inventories in FY09.
In contrast to increased activities in shipping, port and air transport, value addition from Pakistan
Railways (PR) declined further in FY09. Aggregate revenue of Pakistan Railways increased by
25 percent in FY09, however increase in total expenditure was greater than increase in revenues.
Considerable decline in development spending in PR in FY09 was major reason holding back
administrative reorganization in FY09. Pakistan Railways did not manage to curtail total
expenditures even in the backdrop of declining fuel prices in FY09. Resultantly even after
exhibiting increase in both freight and passenger traffic in FY09, VA from Pakistan Railways
ended up in negative.
Communications
Value addition in communications emanates mainly from cellular, fixed (land) lines, postal and
courier services. Mobile communication has exhibited significant growth in recent years and their
contribution is about two-third of the total growth in transport, storage and communications in
FY08. This strong growth was aided by inflow of foreign investment, growth in franchising
services and the obvious fact that aggressive initiatives of mobile services providers were aimed
at capturing the untapped market potential up to FY08. Cellular density as a percent of total
population grew from 6.25 percent in July-2004 to 60.3 percent of the population by June 2009.
Growth in cellular communications, however could not maintain its upward trend in FY09 mainly
due to decline in the pace of foreign investment, saturation in cellular consumer market, and the
impact of increased taxation. Average revenue per user (ARPU) per month which was US$ 9.1 in
FY05, declined to US$ 3.1 at the start of FY09. Factoring in these adversities, value addition in
mobile communications declined significantly in FY09; consequently the share of
communications in overall sub-sector growth declined from 66 percent in FY08 to about 20
percent in FY09. Value addition by PTCL also exhibited decline in FY09, as total revenues of
PTCL exhibited a larger slowdown in comparison to total expenditures. The slowdown in
revenues is attributable to stiff competition in wireless, fixed and broadband consumer market.
Consumer market share of PTCL therefore declined slightly.
Consequently, other communication service namely; LDI, broadband internet (wired and
wireless), wireless local loop exhibited significant growth. Although contribution of these
services in overall value addition in communications is still quite low, improvement in these
services bodes well for the future expansion as well as stable and broad based growth in
communications.

State Bank of Pakistan - Annual Report 2008 – 09 (Volume I) – Chapter 2: Economic Growth,
Savings and Investments.
http://www.sbp.gov.pk/reports/annual/arFY09/qtr-index-eng-09.htm