ISLAMABAD: The government has been unable to achieve its first-year growth rate target with the economy growing only 4.1% in the outgoing fiscal year -- a rate that carries substantial risks of downward revision once actual public spending figures are compiled.
The 4.1% growth rate was mostly driven by industrial growth, while targets in the agriculture and services sectors, which contribute about three-fourths of national output, were missed.
The National Accounts Committee (NAC) on Thursday approved the provisional growth rate of 4.14% for fiscal year 2013-14. The official economic growth rate target was 4.4%.
Minister of Finance Ishaq Dar meanwhile expressed hope that Pakistan would move beyond the 4% GDP growth rate in the next year and reach 5% in the coming years, APP reported.
The growth rate is provisional and subject to changes on the basis of actual national accounts, Chief Statistician of Pakistan Asif Bajwa said while talking to The Express Tribune.
The NAC has taken into account the budgeted figures of public sector development spending, while actual spending is expected to remain less than half of the total allocation, according to officials privy to the NAC meeting discussions.
The NAC has worked out growth in the construction sector on the basis of Rs1.155 trillion spending by the provincial and federal governments. The actual spending will remain less than Rs600 billion, according to the officials.
Against an allocation of Rs615 billion, the four provinces have spent only Rs199 billion in the first nine months of the fiscal year. The provinces are earning profits by keeping their cash with the federal government instead of spending on provision of social services. Against an allocation of Rs540 billion, the federal government spent Rs196 billion in the first nine months of the fiscal year.
The officials revealed that once the actual spending figures are available, the lower spending will erode by 0.2%, bringing down the provisional figure to 3.9%. On the basis of the budgeted amount of Rs1.155 trillion, the NAC has showed 11.3% growth in construction sector in the outgoing fiscal year, according to NAC documents.
Out of 23 key growth indicators, the NAC documents showed that the government achieved only eight targets, while performance against 15 indicators, primarily in agriculture and services sector, remained below the expectations.
Inflation and foreign reserves
Minister of Finance Ishaq Dar said that the inflation rate has remained in single digits with 8.6%, adding that the international community is convinced that inflation had come down while the growth rate is appreciating.
Dar also highlighted that the foreign exchange reserves are now touching the $13 billion figure, reported APP, adding that trade deficit had decreased to $13.93 billion in the first ten months the fiscal year from $14.74 billion during the first ten months of last year.
"Today international financial organisations and investors are reposing confidence in Pakistan and we are moving ahead as per our budgetary targets," the minister said while giving a policy statement in the National Assembly.
COMMENTS (15)
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@Ali: Wikipedia is not a reliable source, at least according to my university teachers.
@Ali: this is added by an indian (sukhbir 111) recently, literally correct though doesnot give real account of the situation.loan is taken by gov only to intall new megaproject
These figures are "real" growth rates which takes inflation into account (meaning that the 8.6% has been subtracted already).
@Wizarat & Allah Daad - the growth rate is real GDP growth rate and not the nominal growth rate. Your assertions would be correct if the it was not the real rate - however, the convention for growth rates is to always use Real rates.
@Wizarat: @Ch. Allah Daad: Growth rate usually is real growth rate. So if inflation is 8.6% and reported groowth rate is 4.1% then the nominal growth rate would be 12.7%
Of course given the history of fudging numbers, I am not sure if the 4.1% number is correct.
STAGFLATION continues.............
Waiting for maryam nawaz tweet also proclaiming this as a pmln success :)
People forget that the IMF had projected growth at 3.3% , revised upwards from 2.9% and yet the government has achieved a more higher GDP growth.
Actually, the governement did not achieve any of its own targets for the first year. But I am not surprised at all, after all, we are talking about PMLN.
Yes Pakistan would have most definitely defaulted had people of Pakistan commited the folly of electing pti and they didn't thanks God.Well done pmln.
Raise your hands if you trust Mr. Charles Sobhraj.
In simple words we are poorer by 4.5%. Inflation minus growth.
With 8.6% inflation, it is my understanding that on average basket items went up by this amount; and is reflected in the economy. Why is Mr. Dar so happy with a GDP growth of 4.1% as the inflation (no productivity but increased cost only) should have accounted for 8.6%. With these figures there has been an actual decrease in Productivity in Pakistan to the tune of 4.5% of GDP. One needs to be very careful in using numbers as they can be used to justify almost any scenario.
Pakistan economics should work on "Iqtisadiyyat" and not on just principles of Economics as in Economics one do not consider Humans but just MONEY. And humans are used as consumable resources; whereas in Iqtisadiyyat the welfare of people is foremost.
We have to achieve GDP growth rate at 7.2% so in 10 years our gdp will be doubled. If we maintain this growth rate then in next 20 years Pakistan's GDP will be 1 trillion dollars.