Agriculture slowdown puts wrinkle in Pakistan growth outlook

ISLAMABAD: Pakistan’s neglected agriculture sector is all set to face a major blow as the farm sector growth is expected to touch zero in the current fiscal year mainly because of negative growth in major crops including cotton, rice and sugarcane as well as dwindling commodity prices in international market, a senior economist said on Tuesday.

“The agriculture growth might touch zero in the current fiscal year mainly because of negative growth of major crops like cotton, rice and sugarcane and poor performance of minor crops,” said Dr Hafeez A Pasha, former finance minister, when contacted for his comments. “The livestock might not be able to compensate overall farm growth up to the desired mark during the outgoing financial year.”

Dr Pasha said whenever the country’s agriculture sector witnessed a dip; its overall gross domestic product (GDP) growth rate never crossed 4 percent in any year mainly because the country’s overall economy was largely dependent upon agriculture in terms of trade, commerce and agri-based exports.

Sources, however, said in the wake of expected flat growth of agriculture sector, which will remain in the range of just 0.3 to 0.5 percent, “Pakistan’s prospects for achieving overall GDP growth rate have also plunged into danger zone as the growth rate will be hovering around 4.5 to 4.7 percent maximum for outgoing fiscal year against desired envisaged target of 5.5 percent in 2015-16.”

When contacted a top official of the Pakistan Bureau of Statistics (PBS), he said the National Accounts Committee (NAC) was expected to meet by mid of next month. The PBS is not responsible to collect primary agriculture data as NAC’s agriculture committee will provide data to the PBS on the basis of which the farm sector growth will be estimated on provisional basis.

“As the PBS did not see the data so far so it would be premature to give any judgment on this issue,” the official said. But he added that the wheat crop might produce positive results mainly because of its output achieved in Barani areas of the country.

Many independent economists believe that the country’s agriculture sector might witness a negative growth in the current fiscal year but some economic managers claimed that the farm growth might slide into positive side by demonstrating nominal growth just around 0.5 percent. However it would be definitely missed out the fixed target of 3.9 percent for the current financial year.  

For finalizing the Budget Strategy Paper (BSP) for next three years, Finance Ministry refused to bring down its envisaged GDP growth rate target of 5.5 percent for the current fiscal year despite insistence of Planning Commission to cut it to around 5 percent.

Ministry of Finance still appeared confident that the manufacturing and services sector could play major role to jack up overall GDP growth rate over 5 percent as they claimed that the sale of cement is increasing.  

Overall, the agriculture sector grew by 2.9 percent in last fiscal year of 2014-15, which was lower than the envisaged target growth of 3.3 percent but higher than the growth of 2.7 per cent achieved during the fiscal year 2013-14.

The agriculture sector is targeted to grow by 3.9 percent this year on the basis of expected contributions of important crops (3.2 percent), other crops (4.5 percent), cotton (5 percent), livestock (4.1 percent), fishing (three percent) and forestry (four percent).