By a standard textbook calculation (Bernanke, 2003b), this amount of slack should lead to additional disinflation of a few tenths of a percentage point or so by the end of 2004. So by my reckoning, inflation in 2004 might well be a bit lower than in the second half of 2003, not higher as the majority of private-sector forecasters have projected.
Pakistan has been able to somewhat diversify its exports: Share of textile has fallen from 65 to 59% over last few years and within this sector there has been growth in higher value addition products in particular in home textile where Pakistan has a leading edge.