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Tuesday March 19, 2024

‘Unemployment, poverty to escalate in years ahead’

By Mehtab Haider
January 23, 2019

ISLAMABAD: Unemployment and poverty are bound to escalate in the years ahead, in case the IMF’s downward projections for Pakistan’s GDP hold true, economists said on Tuesday.

The IMF’s World Economic Outlook (WEO) has slashed down GDP growth projections massively and estimated that it might nosedive to three percent for the current fiscal year.

Former finance minister and renowned economist Dr Hafiz Pasha told The News that it might be hard to jack up GDP growth rate in the range of 2.5 to three percent for the current fiscal year in the wake of bad performance of agriculture and industrial sectors.

He said the cotton production declined by 0.75 percent, and sugarcane production declined as well. With the recent rains, wheat production was estimated to achieve positive growth.

“Overall, if the agriculture sector achieves positive growth of one to 1.5 percent, it will not be less than a miracle,” the economist said.

The large scale manufacturing (LSM), he said, lowered by one percent during the current fiscal year. With the possible growth of four percent by the service sector and few percentage points by all other sectors, the overall GDP growth might not cross 2.5 percent in the current fiscal year, Dr Pasha said.

The construction sector, he added, was also expecting slow growth because the spending of Public Sector Development Programme was slashed down, so, the chances of picking up growth momentum seem difficult in the medium-term.

“Overall, macroeconomic projections made by the government have disappointed me,” Dr Pasha said.

Contrary to the overambitious macroeconomic projections likely to be unveiled by Finance Minister Asad Umar in the parliament on Wednesday, the IMF had revised GDP growth projections downwards to three percent for the current fiscal and in the subsequent years under PTI rule.

The IMF has projected that the real GDP growth would be touching 3.5 percent in FY2020, 3.5 percent in 2021, three percent in 2022, and three percent by FY2023.

On the other hand, the finance minister would unveil the GDP growth trajectory starting from 3.3 percent in the current fiscal year to achieve GDP growth rate of six percent down the lane till FY2023.

The Finance Ministry has projected that the current account deficit, which stood at 6.1 percent of GDP in 2017-18, would be touching the lowest ebb at 0.3 percent of GDP in five years period of the PTI-led regime.

According to the macroeconomic framework under the 12th Five Year Plan from 2018-19 to 2022-23 prepared by the Planning Commission, the government wants to achieve an average growth rate of 1.6 percent for the agriculture sector in five years, with 2.4 percent in 2018-19, 3.7 percent in 2019-20, 3.9 percent in 2020-21, and 4.1 percent in 2022-2023.

In five years, the government targets to achieve 2.6 percent growth for crops, and 3.8 percent growth for livestock.

Moreover, the targeted average for industrial growth was 6.8 percent, with 3.7 percent in 2018-19, 5.8 percent in 2019-20, 7.1 percent in 2020-21, 8.4 percent in 2021-22, and 9.2 percent in 2022-23.

The government expects to achieve manufacturing growth of 6.9 percent in five years, with 3 percent in 2018-19, 5.8 percent in 2019-20, 7.4 percent in 2020-21, 9.1 percent in 2021-22, and 9.4 percent in 2022-23.

The average GDP growth in five years has been targeted at 5.8 percent with 4.2 percent in 2018-19, 5.4 percent in 2019-20, six percent in 2020-21, 6.5 percent in 2021-22, and 7 percent in 2022-23.