Pakistan's economy likely grew two percent in the fiscal year ending June 30, battered by the global recession and a Taliban insurgency, a government official and report said Thursday. Pakistan had targeted 4.5 percent growth this year, but instead will report its worst-recorded GDP growth since the financial year 1997-98, when the State Bank of Pakistan put the rate at 1.9 percent. 'The country's economy grew by two percent this fiscal year. Last year the growth rate was 4.1 percent,' said Shaukat Tarin, financial advisor to Pakistan's prime minister, unveiling the yearly economic survey. 'Most of the sectors showed poor performance except for agriculture, that demonstrated growth,' he added. The bleak economic news comes with the military bogged down in an offensive against the Taliban in the country's northwest, under huge US pressure to crush militants whom Washington has branded the greatest terror threat to the West. The economic survey said the 'intensification of war on terror into settled areas', domestic issues such as energy shortages and political turmoil, and global financial woes 'tested the resilience of economic fundamentals.' Pakistan's economy has also been under huge inflationary pressure, which created a serious balance of payment crisis in November that forced the country to approach the International Monetary Fund for a 7.6-billion-dollar loan. In the first 10 months of the fiscal year, the inflation rate was 22.3 percent, against 10.3 percent in the same period of last year, the survey said. The nation has also been battered by a manufacturing slump. Exports saw negative growth of 2.6 percent, declining from 16.40 billion dollars to 16.00 billion dollars year on year. Imports stood at 26.77 billion dollars against 28.71 billion dollars last year. Pakistan's current account deficit shrank by 23.5 percent in the first ten months, reported at 8.5 billion dollars against 11.2 billion dollars in the same period last year. Foreign investment in the volatile, nuclear-armed nation, meanwhile, declined by 42.7 percent, clocking in at 2.2 billion dollars against 3.9 billion dollars last year, the economic survey said. The US remained the largest investor with a 23.2 percent stake in the FDI. 