Government sets growth target at 6.2 percent for 2018/19

ISLAMABAD: Government on Monday set 6.2 percent as growth target for the next fiscal year of 2018/19, while approving the annual macroeconomic framework, betting on the decades-high number of 5.8 percent during the outgoing fiscal year.

A meeting of the Annual Plan Coordination Committee (APCC), headed by Minister for Planning Ahsan Iqbal, forecast average inflation for the next fiscal year at around six percent as against the projected inflationary pressure of four percent for the outgoing fiscal year.

Inflation in the remaining months of the current fiscal is expected to touch the lowest ebb, so the base effect will be resulting into pushing up inflationary pressure in the next fiscal year. Economic managers are expecting monthly inflation to reach seven percent next fiscal year, but annually it would average six percent.

The government projected the current account deficit at $12.5 billion, equivalent to 3.8 percent of GDP, for the fiscal year of 2019. The current account deficit was kept on the lower side with assumptions that rupee would be hovering around Rs117 against the US dollar and imports would be curtailed after reduction in imports related to China-Pakistan Economic Corridor projects.

The current account deficit was projected below $10 billion during the last budget for the fiscal year of 2017/18, but it is expected to go close to $15 billion till June-end. Official estimates, however, put the current account deficit at $13.7 billion or 4.4 percent of GDP for the current fiscal year.

Pakistan’s economy size is expected to touch Rs38.312 trillion in the next fiscal year as against Rs34.396 trillion for the outgoing fiscal year.

The Annual Plan Coordination Committee’s meeting fixed exports target at $27.3 billion for FY2019 as against $24.5 billion in FY2018. Imports are expected to go up to $56.5 billion in the next fiscal year, indicating that the trade deficit would widen to $29.2 billion.

Analysts believe that the current account deficit would swell to 4.4 percent of GDP, equivalent to $14 billion, during the fiscal year of 2018/19. They said it would be hard for the government to ease deficit despite exchange rate adjustment and slashing imports. The major drivers of imports are petroleum, lubricant and oil products, mobile phones and edible oils and others.

“Reduction in power machinery imports may give a relief in the range of $400 to $500 million only,” an analyst said. Government set growth target for agriculture sector at 3.8 percent during the next fiscal year, industry 7.6 percent and services 6.5 percent. Cash crops are expected to grow three percent and livestock 3.8 percent for FY2018/19.

Generally, manufacturing sector is estimated to grow at 7.8 percent and large scale manufacturing at 8.1 percent to materialise the industrial growth target of 7.6 percent for the next fiscal year.

Moreover, APCC envisaged investment to GDP ratio at 17.2 percent in the next fiscal year, while savings to GDP ratio is expected at 13.3 percent and foreign savings to GDP ratio is targeted at 3.8 percent.