Pakistan is now a $300-billion economy

Published: May 18, 2017
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 PHOTO: INP

PHOTO: INP

ISLAMABAD: Pakistan has achieved 5.3% economic growth, the highest in a decade, on the back of recovery in the agriculture sector and better-than-expected performance in the services sector, stated the government on the basis of provisional figures.

The growth puts the country in the league of economies that have a size of over $300 billion.

Gross Domestic Product, the monetary value of all goods and services produced in one year, is projected to have grown at a rate of 5.28% during the fiscal year 2016-17 ending on June 30, National Accounts Committee (NAC) said.

World bank report: Pakistan among top 10 economies

However, the figure is provisional and subject to variations once the final results are available at the end of the fiscal year.

At 5.3%, Pakistan’s economic growth has finally attained the pace it had before the crisis hit the country in 2008.

For the next fiscal year 2017-18, the government has set the GDP growth target at 6%.

Nonetheless, the PML-N government again missed its annual GDP growth target of 5.7% for the outgoing fiscal year. Yet, the results were better than the forecasts made by international financial institutions.

As a result of over 5% growth rate, the nominal size of Pakistan’s economy increased to $304.4 billion.

Understanding GDP growth

Slightly over two-thirds of the growth – 67% to be precise – came from the services sector, which performed even better than the estimates. The government achieved services and agriculture sectors growth targets but missed the industrial sector growth target despite heavy focus on it.

Despite a better economic performance, the growth rate was still insufficient to absorb the youth bulge and any pace of growth below this rate would increase unemployment. The government also failed to address serious issues like stagnant investments and savings in terms of total size of the GDP and declining exports.

Against the annual target of $24.8 billion, the government has now expected that the exports would remain close to $21.7 billion and even imports are likely to exceed the $45.2 billion projections.

The current account deficit target of $4.5 billion has been missed by a wide margin and now the government expects an $8.3 billion current account deficit by June this year.

The contraction in exports remained a big challenge due to lack of focus on value addition sectors, said Ahsan Iqbal, Federal Minister for Planning and Development on Wednesday. But he said that the government’s focus on energy and infrastructure helped achieve the 10-year high growth rate of 5.3%.

In its 98th meeting, the NAC approved the provisional growth rate for the outgoing fiscal year, revised down the 2015-16 growth rate to 4.5% and approved the final growth figure of 2014-15 at 4.1%, according to NAC documents.

Finance Minister Ishaq Dar will formally announce a provisional growth rate of 5.3% on May 25, with the release of the 2016-17 Economic Survey of Pakistan.

Out of total 20 key growth indicators, 11 hit the government’s targeted growth rates while 9 indicators, primarily in industrial sector, remained below expectations.

Agriculture

After witnessing flat growth in the last fiscal year, the agriculture sector this time performed better due to exceptional growth in forestry and better performance of major important crops. The sector grew at a pace of 3.5%, equivalent to the annual target.

After facing criticism, the ruling PML-N government finally focused on the sector, which paid dividends. The sector employs close to 37% of the labour force.

Production of major crops saw 4.1% growth but in case of other crops, the target was missed as these minor crops witnessed hardly any growth. Cotton ginning remained even better than the 2.5% target and showed 5.6% growth. Livestock also posted 3.4% growth but missed the annual target with a small margin. Forestry sector showed 14.5% growth, which was many times more than the 3% annual target. Fishing sector grew by only 1.2% against 3% target.

Industries

The government missed all its targets set for the industrial sector despite having the most favoured status. There was presumably zero load-shedding for the sector and it also won many incentives from the government.

Agriculture is backbone of our economy: Jhagra

However, against a target of 7.7%, output stood at 5%. The output of large-scale manufacturing stood at 4.9%, below the official target while small-scale manufacturing grew to 8.1%, slaughtering 3.6%, electricity generation and distribution only 3.4% against a target of 12.5%, mining and quarrying sub sector grew only 1.3% against a target of 7.4%. The construction sector grew at a pace of 9% but missed the target of 15.2%.

Services

The services sector, which accounts for more than half the economy, grew by almost 6% against a target of 5.7%. Aided by heavy government borrowing and an increase in the money supply, the financial services sector and government services beat expectations. Wholesale and retail trade posted 6.8% growth against a target of 5.5%. Transport, storage & communication sub sector saw 3.9% growth. Finance and insurance witnessed 10.8% growth against a target of 7.2%.

Published in The Express Tribune, May 18th, 2017.

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Reader Comments (23)

  • Aware Citizen
    May 18, 2017 - 9:23AM

    All this figures are baseless! Millions of Pakistani youths are jobless.No industrial growth. Every year Universities pouring millions of graduates in a Market where no jobs due to no any industrial ,manufacturing growth. Recommend

  • Hammad Ansari
    May 18, 2017 - 9:31AM

    “The government missed all its targets set for the industrial sector despite […] zero load-shedding for the sector…”
    The question is, if we are able to add 50,000 MW is the system, how much growth can be estimated?Recommend

  • karachiite
    May 18, 2017 - 9:44AM

    i am not financially literate, but i don’t believe any of this ‘development’ holds value if the standard of living of people and human development index of the country aren’t going up.Recommend

  • Sameer
    May 18, 2017 - 9:57AM

    No jobs, no healthcare, no security of life or property. Keep this media figure 5.3 to yourselves. Recommend

  • Jawad U Rahman
    May 18, 2017 - 10:09AM

    The bigger story is that as of 2017, Pakistan is a Trillion dollar economy (in PPP terms) and in the top 15 world economies.Recommend

  • Fast
    May 18, 2017 - 10:38AM

    Rising Pakistan.Recommend

  • Azmat Ali
    May 18, 2017 - 11:42AM

    Dhiraj Kumar don’t worry…you should not be worried about to whom we will give. I think you didn’t get loan from your country so that is why you are so depressed. But I assure you if you need money I can give you and it would be without interest.Recommend

  • abood
    May 18, 2017 - 11:53AM

    Great going.we need more development.PMLN deserves appreciation on this.Recommend

  • DevilHunterX
    May 18, 2017 - 1:25PM

    The famous Ishaq Dar Typos ™ are back!Recommend

  • Mango man
    May 18, 2017 - 2:45PM

    India just passed UK as the 5th biggest economy…. just saying! Recommend

  • cuban
    May 18, 2017 - 3:05PM

    Congratulations. To put things in perceptive Los Angeles economy is $1+ Trillion and the Bay Area (San Francisco) economy was over $600 Billion back in 2013. Recommend

  • Rashid
    May 18, 2017 - 3:28PM

    Rupee is overvalued by 15-20% so this number should go down in the near future when we are forced to depreciate our currency.

    Also we should put these numbers into perspective. Per capita GDP (GDP/population) is still very low in Pakistan compared to other countries. Then you have countries like the netherlands which have a population lower than Karachi’s but a GDP more than 3x ours. Hong Kong is home to 7 million and they generate as much output as us.Recommend

  • Tyggar
    May 18, 2017 - 3:36PM

    Why do you need Industrial output, Once the CPEC is ready, all Chinese products will be available by road. Great Job by the way showing loans for CPEC as FDI. Recommend

  • Sodomite
    May 18, 2017 - 4:04PM

    Oh Yeah!!! Then why cant you raise some income tax, or is the economy a figment of your imagination. Recommend

  • ikhlaq
    May 18, 2017 - 5:04PM

    very well narrated……The economic fig mentioned in this article is interesting. but surprisingly the industrial sector still faild to show the results. industry is backbone for the economy your economy will never attained the targets untill unless the industries growth. being an economic students govt shold take serious steps, encourage innovation, Attract FDI throgh attractive policies for investors and facilitate small and medium size industries.Recommend

  • k
    May 18, 2017 - 5:38PM

    congratulations from IndiaRecommend

  • Vineeth
    May 18, 2017 - 5:45PM

    @Jawad U Rahman:
    Check once again. Pakistan is a one trillion dollar economy alright. But it is in 25th position, and India is 9.4 trillion dollars and is in 3rd position behind China and US.Recommend

  • Rao
    May 18, 2017 - 7:29PM

    @Aware Citizen: sir: There is an saying that imperial Frome wasn’t built in a day. So be very patient. When CPEC is co,mpleted, Pakistan will turn out to be a roaring Asian economic Tiger in a decade. That is what economists are predicting!Recommend

  • Pluralist
    May 18, 2017 - 7:37PM

    According to economists at IMF and state bank, Pakistan, about 40-45% of the economy is undocumented and informal economy, that is close to half of the total economy and GDP of Pakistan.

    If that is counted in the whole picture Pakistan economy is much bigger than the 300 billion plus given here, roughly twice the size of it if half of the economy is undocumented. Also the base year for GDP calculation was 1990, a new calculation and a new index will make it much bigger. Recommend

  • Khan
    May 18, 2017 - 9:05PM

    @Vineeth:
    Why does it hurt you if Pakistan economy grows? I’m all happy for India to be no 1 economy since they’re our own people but bear in mind most of your economic development etc comes from Western investments .. I’m living in the west from past 12 years and have yet to find anything Made in India, apart from spices, vegetables or clothes which is widely available from Pakistan & Bangladesh as well. While at the same time we have many Chinese and American products used daily by almost every household.Recommend

  • Azhar
    May 18, 2017 - 9:49PM

    Pakistan will cross USA economically after CPEC.Recommend

  • hamza khan
    May 18, 2017 - 11:10PM

    @Pluralist:
    yes! and ishaq dar (the glorified peon of NS) has stated they are figuring out a better way to document with WB help and will have results on the economy in about a year. in some economists estimates, the size of the actual economy is something closer to $500-600 billion. Recommend

  • Optimist
    May 19, 2017 - 3:04AM

    Veneeth,
    India has much bigger population but the picture is not rosy when compared with Pakistan. India’s debts are nearly half a trillion dollars. Pakistan is not far behind when we look at the real picture (i.e. population).
    .
    Per Capita income (google search)
    India: 1581
    Pakistan: 1430
    .
    Debt to GDP ratio:
    India: 24%
    Pakistan: 26%
    .
    When you say Indian economy is behind US and China, you forget the difference: 17 Trillion (US), 11 Trillion (China) and 2 Trillion (India). Even if India become 17 trillion economy one day, average Indian will be 4 times poorer than average American because of larger population.Recommend

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