Pakistan’s growth rate for FY 2015-16 reached 4.71pc against set target of 5.5pc

ISLAMABAD: Despite witnessing negative growth of 0.19 percent by the country’s neglected agriculture sector mainly because of declined production of major crops especially cotton output, Pakistan’s overall growth rate achieves 4.71 percent for current financial year 2015-16 with major contribution of industry and service sector against the set target of 5.5 percent.

The depressing growth of agriculture sector that had experienced negative output during Musharraf regime one and half decade back because of severe drought in year 2000, but now again the agri sector witnessed negative production of cotton, rice and maize by -27.8 percent, -2.7 percent and –o.4 percent respectively, however, the country’s overall growth was offset through industrial growth of 6.8 percent and services sector of 5.71 percent, pushing overall GDP growth trajectory to 4.7 percent for outgoing financial year. The declined commodity prices in international market caused severe blow to the farming sector.

In industrial sector, the major driver of growth included electricity and gas generation by achieving growth at 12.18 percent, construction 13.1 percent, small scale manufacturing 8.21 percent and mining & quarrying 6.80 percent. The service sector growth has been mainly fueled by general government services by achieving growth of 11.13 percent in FY 2015-16.

The multilateral creditors such as the IMF, WB and ADB had predicted real GDP growth rate of 4.5 percent for the current fiscal year against Islamabad’s envisaged target of 5.5 percent. The negative agriculture sector growth now scaled down the overall growth in the range of 4.7 percent for outgoing financial year.  

The National Accounts Committee (NAC) held its meeting under chairmanship of Chief Statistician Pakistan Bureau of Statistics (PBS) Asif Bajwa here on Friday to finalise provisional estimates of GDP growth for 2015-16 and revised estimates of FY 2014-15 as well as for FY 2013-14.

The working paper approved by NCA shows that with GDP growth rate of 4.7 percent in FY 2015-16, the share of service sector outpaced all other contributors as it stands at 58.4 percent, agriculture sector 21.1 percent and industrial sector 20.5 percent.

Intriguingly, the PBS revised GDP growth of FY 2014-15 by lowering down that now stood at 4.04 percent against earlier provisional figure of 4.24 percent and financial year 2013-14 the revised GDP growth was standing at 4.05pc against earlier estimates of 4.03pc, indicating that the overall growth during the tenure of Nawaz led government crossed average GDP growth of 4 percent in last three consecutive years.

The gross value added (GVA) of electricity and gas distribution at constant price grew by 12.02 percent in 2015-16 as the electricity output decreased by -1.66 percent, Wapda 8.53 percent, KESC -11.53 percent, others -26 percent.

The provisional estimates of gross fixed capital formation (GFCF) for the fiscal year stands at Rs4082 billion thus increased by 5.6 percent as compared to 2014-15. The GFCF in private sector for 2015-16 is estimated at Rs2896 billion as against Rs2792 billion with an increase by 3.7 percent. The GFCF for public sector registered an increase by 2.7 percent. The expenditure on GFCF incurred by federal and provincial governments increased by 13.5 percent and 19.5 percent respectively whereas of districts governments it declined by 14.3 percent in 2015-16.

Agriculture sector: The agriculture sector decreased by negative 0.19 percent. The wheat production stands at 25.4 million tons in FY 2015-16 against 25.086 million tons last year, registering a growth by 1.58 percent. The maize production declined by negative 0.35 percent, rice production by negative 2.74 percent, sugar production by positive 4.22 percent and cotton with massive negative growth of -27.83 percent by witnessing 10.074 million bales in 2015-16 against production of 13.960 million bales in 2014-15.

The important crops declined by negative 6.19 percent, pulses -12.49 percent, vegetables positive by 1.81 percent, fruits negative 2.48 percent, oil seeds -9.56 percent, condiments positive 3.41 percent, green feeder negative 0.23 percent and others positive 5.91 percent. The livestock registered a nominal growth of 3.63 percent with major contribution of forestry at 8.84 percent and fishing 3.25 percent.

The contribution of forestry is high due to low contribution of 2014-15 which is due to the lower number production reported by KP.

Industrial Sector: The overall industrial sector has shown an increase of 6.8 provisionally. The mining and quarrying sector increased by 6.80 percent with main contribution of 37 minerals for which the provincial mining departments are the source of data. However, the production of crude oil decreased by 8.2 percent. The contribution of LSM increased by 4.7 percent with major heavy contributors are cement by 10.4 percent, fertilizer 16.3 percent, automobiles 29.7 percent, cooking oil 8.4 percent. However, pig iron decreased by 99pc, electric meters negative 26 percent, diesel engines -75 percent, wheat thrashers -48 percent and chip board -59 percent.

Electricity and gas sub sector increased by 12.2 percent as subsidies provided to Wapda and KESC incorporated to their output. The improvement is due to high output of Wapda and low deflate 3.1 percent. The construction activity increased by 13.1 percent and contribution of this sector is derived from investment on different construction activities with help of co-efficiency.

The small scale manufacturing grew by 8.21 percent and slaughtering 3.21 percent.

Services Sector: The overall service sector has shown growth of 5.71 percent. The wholesale and retail trade grew at 4.57 percent while transport, storage and communication went up by 4.06 percent. Finance and insurance sector shows that overall increase of 7.8 percent. The housing services grew by 3.99 percent. The General Government Services grew by 11.13 percent in FY 2015-16 against revised estimates of 4.82 percent last year as the PBS stated that it went up because of salaries and inflation.

This scribe contacted to top official of PBS who said that the mineral sector, timely release of subsidies to power sector, IPPs showing positive figures and construction sector compensated well the industrial sector to offset the negative impact of agriculture sector. The services sector, he said, also performed well that paved the way for achieving growth rate of 4.7 percent.

Ashfaque H Khan said that it is strange phenomena that both the private sector investment as reflected by their borrowing from commercial bank and public sector investment as reflected by the revised size of PSDP is on the decline yet Pakistan’s economic growth accelerated to 4.7 percent. In addition, he said the cotton crop down by 5 million bales resulting into negative growth in agriculture which accounts for almost 21 percent of GDP and yet economic growth accelerated to 4.7 percent.

“As I always stated that there are three types of economic growth in Pakistan, one is asking rate of growth, which is asked by Finance Minister, which was 5.5 percent for current fiscal year; there is second rate of economic growth which is known as delivered rate of growth, delivered by PBS which is 4.7 percent; and third rate of economic growth which is the actual rate of growth calculated by professional economists like Dr Hafiz A Pasha, myself and others which is estimated in the range of 3 to 3.5 percent. So there is no point for finance minister to give false sense of prosperity to nation”, he concluded.