Pakistan GDP should grow 6.5-7.0% in 2006-c.bank

LONDON, Mar 8 (Reuters) Pakistan's economy should grow by 6.5 to 7.0 per cent in the fiscal year ending June 1 this year, the governor of the country's central bank, Shamshad Akhtar, said on Wednesday.

Akhtar, who became the first woman in charge of the State Bank of Pakistan in early January, also said the bank would have to continue to apply a tight monetary policy to curb speculative market forces.

''I believe the macro economic prospects point to a strong and robust growth in real GDP in the range of 6.5 to 7.0 per cent for (fiscal) 2006,'' she said in a speech to a Pakistan investment conference in London.

On inflation, she said: ''We would like to see inflation coming down to 8.0 per cent on an average basis for this year, but we would like to aim (for a) further lowering of the inflation rate in the next 12 to 18 months.'' To achieve this objective, she added, the central bank would need to maintain ''a monetary tightening stance...'' She stressed that the central bank, which has kept its discount rate at 11-1/2 per cent since raising it to this level in April last year, was giving attention to strong asset prices.

The Karachi stock market index gained 54 per cent last year, making it one of the best performers in Asia, and has risen further this year.

''The central bank has no option but to continue tight monetary policy to curb speculative forces,'' she declared.

''Maintaining this tight stance, monetary policy conduct for 2005 remains to be supportive of the economy.'' REUTERS SD HS1719