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Pakistan's Economy Posts Historic Gains

Pakistan's prime minister says the country's economy is expected to grow this year at its fastest rate in two decades. But rising inflation could threaten the country's economic gains.

Shaukat Aziz

Prime Minister Shaukat Aziz said Pakistan's gross domestic product will top eight percent this year.

Quite a turnaround for a country that five years ago nearly defaulted on a series of international loans. Wednesday, it is one of Asia's five fastest growing economies.

The country's agricultural and service sectors both grew over seven percent in the past year and its large-scale manufacturing sector was up 15.4 percent.

Mr. Aziz says future gains will depend on a more open economy. Pakistan plans to privatize some of its largest state-owned businesses, including major energy and telecommunications firms.

The prime minister, a former Citibank executive, says the move will help attract more foreign investors to Pakistan.

And that, he says, should expand the economy and help create a new social order in Pakistan.

"Where we have modern, thriving businesses and markets, where our people have social justice, equitable distribution of wealth and equal opportunities to pursue prosperity," he said.

More than one third of Pakistan's 150 million people live below the poverty line.

Mr. Aziz said the government will increase spending on anti-poverty programs, including expanding access to schools and proper health care.

Nevertheless, international economists warn there is a potential downside to the recent economic gains.

Inflation is on the rise and analysts say it could approach nine percent in the coming year.

But Mr. Aziz says Pakistan's monetary policy will address those concerns and help keep inflation in single digits.

The country's central bank raised interest rates 1.5 percent in April.