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GDP Growth

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