ISLAMABAD: Except bringing improvement in curtailing the current account deficit mainly through import compression, Pakistan’s economy has nosedived on all other key indicators during the outgoing financial year.
The overall performance on major economic indicators remained poor on account of overall GDP growth and its main contributors such as manufacturing and agriculture sectors as well as other sectors such as exports, investment and savings in percentage of GDP, per capita income, tax revenues, rising deficit and debt burden, downslide of rupee and stock market and overall sentiments about the economy remained negative. The remittances have increased but average increase stands in single digit.
The first and foremost economic indicator, which is the most crucial one, is the country’s real GDP growth. The government has missed out GDP growth target with massive margin as its provisional estimates suggest that it stands at 3.29 percent against the fixed target of 6.2 percent for 2018-19.
The real GDP growth has nosedived to 3.29 percent in outgoing fiscal year 2018-19 against revised estimates of 5.4 percent for the last financial year 2017-18. Initially the provisional GDP growth was estimated at 5.8 percent of GDP for the last financial year but the incumbent regime constituted a committee that revised downward the GDP growth to 5.2 percent couple of months back. But the recently held National Accounts Committee (NAC) meeting jacked up growth of last fiscal year up to 5.4 percent and estimated GDP growth rate of 3.29 percent for outgoing financial year. The main drivers of growth such as agriculture, manufacturing and construction sector could not perform well in the outgoing fiscal year.
The construction sector achieved a negative growth of 7.57 percent during 2018-19. Alarmingly, the agriculture sector which contributes into national economy to the tune of 19 percent has grown by just 0.85 percent with negative growth of major crops due to decline in production of cotton, rice and sugarcane by negative 17.5 percent, 3.3 percent and 19.4 percent respectively. Only wheat crop has grown at rate of 0.5 percent only. The large scale manufacturing has achieved negative a growth of 2.06 percent in fiscal year 2018-19.
Pakistan’s per capita income came down by 8.23 percent and stood at $1516 in outgoing fiscal year 2018-19 against $1652 last financial year mainly because of depreciation of rupee against dollar.
The per capita income as well as the size of national economy in dollar terms has reduced in the outgoing fiscal compared to the last financial year.
The size of Pakistan’s economy have shrunk in dollar terms and reduced to $291 billion in outgoing fiscal year 2018-19 against $315 billion in revised figures of last financial year 2017-18.
The investment to GDP ratio has also reduced to 15.4 percent against the desired target of 17.2 percent in outgoing fiscal year. The investment to GDP ratio was estimated at 16.4 percent in provisional figures but in revised figures it stood at 16.7 percent of GDP for the last financial year under PML-N led regime.
The savings to GDP ratio stands at almost stagnant in the range of 11.1 percent in 2018-19 against the desired target of 13.1 percent of GDP. The savings to GDP ratio stood at 10.4 percent during last year.
The current account deficit has narrowed down by 30 percent in first nine months as it stood at $9.5 billion in July-March period of 2018-19 against $13.5 billion in the same period of last financial year 2017-18. It is projected that the current account deficit would decline from $19 billion to slightly over $12.5 billion for the outgoing fiscal year.
The remittances from the overseas Pakistani workers increased 8.74 percent to $16.096 billion in the first nine months of fiscal year 2018/19, compared to $14.802 billion in the same period last fiscal
The trade deficit reduced to $26.3 billion during July – April of current fiscal year against $30.17 billion in the same period of the last fiscal year.
The import bill declined to $45.47 billion during first 10 months of current fiscal compared to $49.36 billion in the corresponding period of the last fiscal year.
The exports remained stagnant. The exports were standing at $19.17 billion during July – April 2018/2019 as compared with $19.19 billion in the same period of the last fiscal year.
Budget deficit: The government has not yet released data of fiscal operation for third quarter (July-March) period of the current fiscal year but the budget deficit has certainly crossed 4 percent of GDP and hovering around 4.1 or 4.2 percent. It is all set to cross new heights in history of Pakistan by touching Rs2.9 trillion or 7.6 percent of GDP in the wake of massive shortfall on account of FBR and expenditures overrun as well. The FBR has been facing shortfall of Rs345 billion in first 10 months of the current fiscal year. The debt servicing has gone up owing to hike in discount rates.
The debt is also rising as the government borrowed Rs3.6 trillion in the current fiscal to meet its fiscal requirements. The foreign debt and liabilities have already touched $105 billion and are going to witness new heights by end of the current fiscal year.
The foreign direct investment into Pakistan slumped 51.4 percent to $1.273 billion in the nine months of this fiscal year 2018/19 from $2.621 billion a year ago.
The stock market plumped from 54,000 points to 33,165 during last 10 and half months of the current fiscal year. The rupee is on downslide and depreciated to 151 against dollar from 122 against a dollar in last nine months.