Eco­nomic Sur­vey

The Pak Banker - - FRONT PAGE -

Ac­cord­ing to the Eco­nomic Sur­vey 2017-18, the na­tional econ­omy grew dur­ing the cur­rent fis­cal year, although many vi­tal tar­gets were missed. For ex­am­ple, Pak­istan reg­is­tered a growth rate of 5.8% in 2017-18, the high­est in the last 12 years. It may be added here that dur­ing first three years of the present gov­ern­ment, real GDP growth re­mained above 4 per­cent while for last two con­sec­u­tive years, it re­mained above 5 per­cent. Over the last four decades, the com­po­si­tion of Pak­istan's GDP has un­der­gone con­sid­er­able change as the share of ser­vices sec­tor in GDP has in­creased. Ad­viser to Prime Min­is­ter on Fi­nance Dr Mif­tah Is­mail has dis­closed that Pak­istan's ex­ter­nal debt in re­la­tion to GDP had fallen dur­ing the last five years. The ra­tio has come down from 21.4% of GDP to 20.5% in 2017-18, adding that Pak­istan may have con­tin­ued to bor­row money but it has also re­paid old loans.

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 is al­most equal to the tar­get. 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%.

On the neg­a­tive side, trans­port, stor­age and com­mu­ni­ca­tion sub­sec­tor 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%. 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%.

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 KSE-100 In­dex, which was Asia's top per­former in 2016, un­der­went a mas­sive correction the next year ow­ing to macroe­co­nomic sta­bil­ity, over­val­ued ru­pee, and po­lit­i­cal in­sta­bil­ity. It was only af­ter the first round of de­val­u­a­tion that the KSE-100 started to pick up at the end of De­cem­ber. It has yet to re­cover its losses, and mar­ket talk sug­gests that is un­likely till the elec­tions take place. All said, 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 an­nual eco­nomic sur­vey is a good in­di­ca­tor of where the gov­ern­ment failed and shows the way to correction in the com­ing year.

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