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Wednesday July 24, 2024

3.6pc economic growth, that too is conditional

By Mehtab Haider
June 13, 2024
A labourer bends over as he carries packs of textile fabric on his back to deliver to a nearby shop in a market in Karachi on June 24, 2022. — Reuters
A labourer bends over as he carries packs of textile fabric on his back to deliver to a nearby shop in a market in Karachi on June 24, 2022. — Reuters 

ISLAMABAD: The estimated economic growth of 3.6 percent depends on investors’ confidence, political stability, macroeconomic stabilisation under new IMF programme, improved external inflows, and progress on economic reforms, the government said. 

“Economic outlook 2024-25 is positive with a growth target of 3.6 percent. The economic outlook depends upon keeping investor confidence upbeat, political stability, macroeconomic stabilisation under the new IMF programme, adequate progress on economic reforms, better availability of inputs, supportive monetary and fiscal policies, improved external inflows, favourable weather for agriculture sector and expected fall in global oil and commodity prices,” the annual plan for 2024-25 revealed on Wednesday.

The agriculture is expected to grow at 2 percent in 2024-25 which reflects substantial contraction in the growth momentum. The output of important crops is expected to face contraction of 4.5 percent due to severity of dry weather spell and inadequate water availability due to lower than normal rainfall, especially in case of Kharif crops. However, availability of certified seeds, fertilizers, machinery, pesticides, and affordable credit may support the envisaged sectoral growth. Other crops and livestock subsectors are envisaged to grow at 4.3 percent and 3.8 percent respectively.

The industrial sector is expected to recover in 2024-25 with a targeted growth of 4.4 percent on the back of expected large scale manufacturing (LSM) growth of 3.5 percent. Industrial sector is expected to get boost from improved inputs and energy supplies on the back of anticipated fall in global oil and commodity prices, further easing of import restrictions, higher public sector expenditure, stability in exchange rate and a decline in interest rates. Owing to these factors, prices of construction material are expected to decrease which will support the construction industry to achieve growth target of 5.5 percent in 2024-25.

The services sector is also expected to grow at 4.1 percent. The envisaged growth of 3.1 percent in commodity producing sectors will complement the targeted growth in services sector. Uptick of economic activity in industry especially manufacturing sectors will largely translate into better growth in wholesale & retail, trade and transport, storage & communications etc.

Total investment-to-GDP ratio is expected to increase from 13.1 percent in 2023-24 to 14.2 percent in 2024-25 due to expected economic turnout, improved business environment and political stability (Annex-1.2).

Fixed investment is expected to grow by 27.6 percent on nominal basis, whereas as a percentage of GDP, it is expected to increase from 11.4 percent in 2023-24 to 12.5 percent in 2024-25. National savings are targeted at 13.3 percent of GDP in 2024-25.