Government hopes GDP to surpass 6 percent target in FY18

ISLAMABAD: Government on Wednesday said the growth target of six percent set for the current fiscal year will be achieved and it “may even be surpassed.”
“GDP growth target for 2017/18 and beyond is above 6 percent per annum,” the finance ministry said in a statement.
“Economic data for Q1 FY2018 (July-September) shows strong performance of the economy and reversal of some of the negative trends of past in external and fiscal situation.”
Exports, which registered a negative growth of 1.3 percent in first half of 2016/17, have returned to growth zone.
In July-September, exports posted a healthy growth of 12.4 percent as compared to the same period last year. Imports increased 25 percent month-on-month basis, but growth in imports has begun to decelerate.
Workers’ remittances have returned to growth zone, showing an increase of 2.3 percent during July-October.
Current account deficit shows an improvement of four percent for the July-October period as compared to March-June period of last year.
“Evidently, the recent pressure on external account is transitory and is likely to peak out this year as various energy and infrastructure projects are completed by June 2018,” the ministry said.
Foreign direct investment inflows were $940 million in July-October as compared to $539 million during the same period last year, registering a massive growth of 74.4 percent.
The finance ministry said tax revenue collection increased 20 percent in Q1. “Fiscal deficit stood at manageable level and was lower than the same period last year, signaling that fiscal consolidation is on track this year.”
The ministry further said growth in large scale manufacturing sector increased 8.4 percent during Q1, 2018 as against 1.8 percent last year.
“Increased manufacturing output is backed by low interest rate environment and low inflation,” it added.
Government projected cotton output at 12.6 billion bales for the current fiscal year, which is 17.8 percent higher than last year.
“Increased cotton output will have positive impact on other sectors of the economy as well,” it said.
The ministry said the present government inherited a fragile economy characterised by low investments, high inflation, low GDP growth, high fiscal deficit, low tax to GDP, low level of foreign exchange reserves and a looming external debt default with rising power sector circular debt and severe energy crisis.
The country achieved the 10-year highest growth of 5.3 percent during the last fiscal year.  
“Despite challenges, S&P (Standard and Poor’s), in its rating report on 25 October, reaffirmed Pakistan ‘B’ short-term and long-term ratings with stable outlook and acknowledged that Pakistan’s external account challenges are short-term and will recede within two years’ time,” the finance ministry added.