Economic growth hit 12-year high, claims govt

National Accounts Committee works out the rate on basis of 7-8 months data

ISLAMABAD: The Pakistan Muslim League-Nawaz (PML-N) led federal government has claimed to have achieved 5.8% economic growth rate in its last year in power that is the highest rate in the past 12 years, as almost all sectors of the economy have shown a better performance in the outgoing fiscal year.

The government hopes that the decent economic growth rate will give political advantage to the ruling party in the upcoming general elections. However, unemployment remained high as most of the growth came from the services sector that is not job intensive.

The industrial sector’s growth also fell short of the target.

The Gross Domestic Product (GDP), the monetary value of all goods and services produced in one year, is projected to have grown at a rate of 5.79% during the fiscal year 2017-18 ending on June 30, the National Accounts Committee (NAC) announced on Monday.

In its 99th meeting, the NAC worked out the annual growth rate on the basis of seven to eight months of data due to the government’s decision to advance the calendar of the budget to April 27.

Last time in 2005-06, the country had achieved the 5.8% economic growth rate. In dollar terms, the size of Pakistan’s economy has projected to be grown to $312.7 billion by fiscal year 2017-18. However, the per capita income in dollar terms grew marginally by 0.6% to only $1638.2 per person.

In rupee terms, the per capita income was Rs180,204 this year – up from Rs162,230, showing a growth of 11%. The economic growth rate was slightly lower than the official target of 6% but better than the projections of international financial institutions and independent economists.

The 5.8% provisional growth figure is subject to variations once the final results are available at the end of the fiscal year. A 5.8% growth rate has shown the resilience of Pakistan’s economy, also fuelled by the China-Pakistan Economic Corridor, recovery in the agriculture sector and constant healthy growth in services.



For the next fiscal year 2018-19, the outgoing government plans to set the GDP growth target at 6.5%.

In its 99th meeting, the NAC approved the provisional growth rate for the outgoing fiscal year, revised the 2016-17 growth rate to 5.37% and approved the final growth figure of 2015-16 at 4.56%, the NAC documents state.

Slightly over two-thirds of the growth – 66.4% to be precise – came from the services sector, which performed slightly better than the expectations. The government achieved services and agriculture sectors growth targets but missed the industrial sector growth target again despite heavy focus on it.

Despite a better economic performance, the growth rate is still insufficient to absorb the youth bulge and any pace of growth below 7% rate will increase unemployment. The government also failed to address serious issues like stagnant investments and savings in terms of total size of the GDP and stagnant exports.

The current account deficit target of $9 billion will be missed by a wide margin and now the government expects the $15.6 billion current account deficit by June this year.

The Adviser to Prime Minister on Finance Dr Miftah Ismail will formally announce the provisional growth rate of 5.8% on April 26, with the release of the Economic Survey of Pakistan for 2017-18.

Agriculture

After witnessing 2% growth in the last fiscal year, the agriculture sector this time performed better due to exceptional growth in cotton ginning and better performance of crops. The sector grew at a pace of 3.81% this year, against the government’s target of 3.5%.

Production of major crops saw 3.6% growth against the target of 2%. This time the minor crops also grew by 3.33% against witnessing contraction in the last year. Cotton ginning surpassed the 6.5% target and showed 8.7% growth.

Livestock also posted 3.8% growth, which is equal to its annual target. Forestry sector showed 7.2% growth but remained below the target of 10%. There was a surprising trend. The NAC revised down last year’s forestry growth figure of 14% to negative 2.3% growth rate.



Fishing sector grew by 1.63%, which almost equal to the target.

Industries

The government missed all its targets set for the industrial sector despite giving it a preferential treatment in supply of electricity. Heavy taxation and blockage of tax refunds affected the sector’s performance.

Against a target of 7.3%, the output in the industrial sector stood at 5.8%. The output of large-scale manufacturing stood at 6.2%, which was below the official target while small-scale manufacturing grew to 6.1%, also below the target.

The slaughtering sector grew 3.5% and remained shy of the target. The electricity generation and distribution grew only 1.8% against a target of 12.5%, mining and quarrying sub sector grew 3% against a target of 3.5%. The construction sector grew at a pace of 9.1% but missed the target of 12.1%.

Services

The services sector, which accounts for more than half of the economy, grew by 6.43%, slightly above the target. The wholesale and retail trade posted 7.5% growth against a target of 7.2%.

Transport, storage and communication sub sector saw 3.6% growth and fell short of the 5.1% target.  Finance and insurance witnessed 6.1% growth against a target of 9.5%. The housing services saw a growth of 4% and the general government services 11.4% against the target of 7%.