Efforts under way to boost GDP growth to 3%: source

ISLAMABAD: Efforts are under way to jack up real GDP growth to around 3 percent for the current fiscal year amid low investment and savings rates, it is learnt.

Top official sources confirmed to The News that it is yet to be ascertained from where this level of growth will be achieved at a time of contraction in the Large Scale Manufacturing (LSM) and dismal performance in the major crops of the agriculture sector. Second quarter growth was jacked up by tinkering with livestock growth, which is the highest in the history of the country.

For clinching this level of growth, the GDP growth in the third quarter (January to March) will have to achieve a provisional growth rate close to 5 percent at a time when the Large Scale Manufacturing (LSM) and major crops were showing contractionary trends.

The Ministry of Planning, Pakistan Bureau of Statistics, and the Ministry of Finance are abuzz with the discussions on GDP growth rate just ahead of the upcoming budget, as it will be released through the Economic Survey for 2024-25. After the State Bank of Pakistan’s projections of an inching GDP growth rate at 3 percent, the dwellers of P (Planning Commission) and Q block (Finance Ministry) are enthusiastic to urge the relevant authorities to portray a higher growth trajectory. How this wish can be turned into a reality is not yet known, keeping in view the performance of the various sectors.

The LSM remains under pressure, with output declining by 1.9 percent during Jul-Feb FY2025, compared to a 0.4 percent contraction last year. In February, LSM registered a month-on-month (MoM) decline of 5.9 percent and a year-on-year (YoY) decrease of 3.5 percent.

The Ministry of National Food Security & Research in its meeting of the Federal Committee on Agriculture (FCA) held on 29th October, 2024, fixed wheat area and production targets for (2024- 25) at 9262 (000 ha) and 27920 (000 tons). Now, efforts are underway to boost it to 29 million tons. The Punjab government has already started a campaign on social media to downplay the impact of its decision not to support farmers.

As per a report of Indus River System Authority (IRSA) for December 2024, the irrigation water supply was 4.93 MAF against last year’s supply of 5.23 MAF decrease by 5.79 percent. (SUPARCO Monthly Bulletin January 2025).

The cotton crop fell by 33 percent, which necessitated an additional 2 million bales to meet textile industry raw material requirements and an additional import burden of USD 587 million up to March 2025.

In the first half (July to Dec) period of the current fiscal year, the National Accounts Committee (NAC) in its provisional growth estimates, revised the growth rate up to 1.34 percent for the first quarter from its earlier estimates of 0.9 percent for the first three months of CFY. The growth rate for the second quarter (Oct to Dec) has been estimated at 1.73 percent, with agriculture, industry, and services standing at 1.10%, -0.18%, and 2.57 per cent respectively.

The major agri crops have contracted by 5.38 percent. The contraction of 7.65 percent in important crops is due to reduction in production of cotton (-30.7% from 10.22 to 7.084 million bales), maize (-15.4% from 9.74 to 8.24 million tons), rice (-1.4% from 9.86 to 9.72 million tons), and sugarcane (-2.3% from 87.64 to 85.62 million tons).

The wheat crop, which had no impact in Q1, has shown a decline of -6.8% in area as compared to last year.

Keeping in view all these factors, the multilateral lenders have projected the country’s GDP growth rate in the range of 2 to 2.6 percent, but here the efforts have started to boost growth over 3 percent. Independent experts believe that, given performance during the first half, GDP growth is hardly expected to surpass the 2 percent level. Average growth during the first half is 1.5%, and if the economy grows by 3% in 3rd quarter, the GDP growth could barely touch 2%. Normally, in estimating GDP growth first three quarters’ data is taken into account, and the average growth in the first two quarters is already released by the PBS.

The Monetary Policy Committee (MPC) of the SBP on Monday kept its FY25 growth projection unchanged in the range of 2.5 – 3.5 percent and anticipates it to accelerate further in FY26. This outlook is, however, subject to risks, particularly from global uncertainty and unfavorable weather conditions for the upcoming Kharif season.

Talking to a high-level government official on Monday, he said that the National Accounts Committee (NAC) was expected to be convened by May 20, 2025, to calculate the estimates of provisional GDP growth for the current fiscal year. It is premature to judge the growth numbers ahead of 15 days without seeing and analyzing the official data of major sectors.

This scribe visited the office of the newly appointed Chief Economist of the country, Dr. Imtiaz Ahmed, on Monday and requested him to discuss issues related to GDP growth projection for the ongoing fiscal year, his staff replied that he was too busy and could not spare time today.