LAHORE - While most of the listed sector has remained secured from the unprecedented floods, the crop damages alone paint a desolate economic outlook for the fiscal year 2010-11, economists said. They observed that most of the descending revision in economic growth is based on agricultural losses while reduction in demand for other industries would most probably start to recover in fiscal year 2011-12. Experts are of the view that losses to Pakistans whole economic recovery has been massive in the aftermath of the floods. According to guess of Ministry of Agriculture, expected losses might cross Rs240 billion. Value attrition from major crops alone mounts to Rs180 billion. They showed expectations that the GDP to grow by 2.1 per cent in 2011 followed by the 4.1 per cent in 2010 while inflation to jump to at 17-18 per cent during FY11. Flood poured uncertainty into shaky fiscal position as water devastated a significant portion of cropped area, disrupted transportation means and chocked economic activities, said Hamad Aslam, a noted financial expert. He observed that in pre-flood scenario, govt was estimating fiscal deficit of Rs780 billion for FY11 - 4 per cent of the GDP. He added that potential shortfall in tax collection was estimated at Rs60 billion in the current scenario which is expected to curtail tax to GDP under 10 per cent. Government has now decided to discard all development projects and transfer funds for rehabilitation. In addition, trend reversal in subsidies is likely amidst higher import requirements for sugar and pesticide, whereas subsidy elimination from energy chain is likely to continue as it would help save Rs109b in FY11. He said that IMF is to provide USD450mn in Immediate Emergency Assistance to Pakistan and seems committed to work towards Completion of Stand-By Arrangement Program Review. Following are the likely outcomes of ongoing review: IMF is expected to relax condition for fiscal deficit by 200bps together with enhancing borrowing limit for budgetary borrowing form SBP. Stock market expert stated that overall investment theme for Pakistan equities stay intact which is largely driven by domestic demand, favorable demographics and rich natural resources. They reiterate that current situation warrants an even closer adherence to screening criteria based on companies with pricing power, devaluation positive revenue stream and attractive dividend yields. For the rest of the 2010 however, equity markets may continue to remain hostage to negative news flow emanating from the situation. Moreover, concerns on rising inflation and fiscal deficit and consequent risk of SBP further tightening the monetary environment will continue to loom over investor sentiments, experts concluded. Salman Abduhoo