UPDATE 1-Pakistan's FY09/10 GDP projected at 2.5-3.5 pct

(Adds quote, details)

KARACHI, Oct 29 (Reuters) - Pakistan's GDP growth is expected to be between 2.5 and 3.5 percent in the fiscal year 2009/10, from from 2.0 percent in the previous year, the central bank said in its annual report released on Thursday.

"A gradual recovery is underway," the State Bank of Pakistan said in its annual report.

"Real GDP growth is likely to be close to the target of 3.3 percent," it said, adding that the real impetus for Pakistan's economy would have to come from the agriculture sector.

The bank projected inflation at 10-12 percent for the fiscal year to June 30, compared with the government's target of 9.0 percent.

Pakistan's inflation for the fiscal year 2008/09 was 20.8 percent.

"A sharp fall in inflation in recent months has reduced uncertainty over relative prices and would support an increase in investment demand," the central bank said.

However, it said some significant risks remained -- such as increase in international commodity prices, particularly crude and palm oil.

The International Monetary Fund, which in November last year approved a $7.6 billion bailout package to help avert a balance of payments crisis in Pakistan, has projected GDP growth to remain unchanged at 2 percent in the 2009/10 fiscal year.

The government's GDP growth target for this year is 3.3 percent.

The State Bank of Pakistan projected both the fiscal deficit and current account deficit for the 2009/10 to be in the range of 4.7 percent and 5.2 percent.

The fiscal deficit and current account deficit were previously 5.2 percent and 5.3 percent respectively.

The government has targetted a fiscal deficit at 4.9 percent and current account deficit at 5.3 percent for the year ending June 30. (Reporting by Sahar Ahmed; Editing by David Fox) (For more Reuters coverage of Afghanistan and Pakistan, see: here)