GDP growth decelerates in second quarter of FY24

ISLAMABAD: To comply with the IMF condition for releasing quarterly figures of Gross Domestic Product (GDP), the government has released the growth rate figure of the second quarter (Oct-Dec) period for the current fiscal year and estimated that it stood at 1 per cent.

The government also revised upward the GDP growth figure of first quarter (July-Sept) period of caretaker government, which was jacked up from 2.13 percent to 2.5 percent in accordance with the revised estimates.

The government had sought GDP growth rate target of 3.5 per cent but Islamabad revised downward the GDP target hovering at around 2 to 2.6 per cent.

An official announcement was made after a National Accounts Committee (NAC) meeting held here on Thursday, stating that the 108th meeting of the National Accounts Committee (NAC) to review the quarterly estimates of Gross Domestic Product (GDP) for Q1 and Q2 for the years 2023-24 was held at the Auditorium of Ministry of Planning, Development & Special Initiatives.

The 107th NAC meeting held in November 2023 approved introduction of the Quarterly National Accounts (QNA) in the statistical system of the country. The QNA provides the pulse of economy at a shorter interval as compared to the Annual National Accounts (ANA). The committee approved the revised first quarter estimates of 2023-24.

Overall GDP for Q1 for financial year 2023-24 has witnessed a revised growth of 2.50% as compared to 2.13% estimated in 107th NAC meeting during the tenure of previous caretaker led regime.

The growth in agriculture has witnessed a healthy revision to 8.58% from 5.06% mainly due to upward revisions in crops posting a double-digit growth of 17.66% as compared to 6.13%.

The important crops, which were previously estimated based on area have witnessed a phenomenal growth of 31.47% because of very low base in 2022-23 and significant increase in production in final estimates of cotton (increased by 108.2% to 10.22 million bales this year against 4.91 million bales last year), rice (increased by 34.8% to 9.87 million tons vs. 7.32 million tons last year) and maize (5.6%).

Despite an improvement in mining and quarrying (from 2.15% to 7.78%), the industry has witnessed a downward revision to -0.24% as compared to growth of 2.48% mainly due to downward revisions in LSM (from 0.68% to -0.87% in QIM), electricity, gas and water supply (from 0.08% to -12.70%) and construction (from 1.73% to 0.74%). The services have posted a modest improvement from 0.82% to 0.92% due to finance and insurance (from -12.79% to -2.88%).

During Q2 2023-24, the economy posted a modest growth of 1.0%. Agriculture has shown a growth of 5.02% as compared to same period of last year mainly due to healthy growth in important crops (8.12%) because of a significant growth in the final production of cotton, rice and maize, first estimate of wheat (6.7% increase in area) and cotton ginning (53.6%). Livestock is at the same level while forestry and fishing have also retained their normal growth.

The industry in Q2, like Q1, has shown a negative growth (-0.84%) as compared to Q2 last year. The mining & quarrying industry has witnessed a negative growth of 4.17% because of decrease in production of gas (-5.04%), marble (-40.13%), limestone (-20%) etc and decline in exploration cost.

Large scale manufacturing, which is based on Quantum Index of Manufacturing (QIM), has witnessed a positive growth of 0.35% due to increase in cooking oil, garments, fertilizers, etc. The electricity, gas and water supply industry has shown a positive growth of 1.54% because of increase in output of IPPs, Hydro and Nuclear plants. The construction industry declined to -17.59% due to decrease in production of cement (-8.7%) and iron & steel (-2.5%) as well as decline in general government expenditure.

The services industry has shown a nominal growth of 0.01% in Q2 of 2023-24. A detailed analysis of the industry reflects a mixed trend. Wholesale and retail trade has witnessed a growth of 2.11% because of positive growth in agriculture output and LSM. The transport and storage industry has increased by 1.13% because of increase in output of railways and road transport. Due to high inflation, real growth in information & communication, finance & insurance and public administration and social security industries has become negative at 5.43%, 11.1% and 16.18% respectively. Further, both education and human health and social work industries have posted a negative growth at 0.85% and 2.53% respectively.

Other private services have been estimated at 3.63% on the basis of indicators received from the sources.