No jobs, houses for three years

ISLAMABAD: In a major setback to the country, Pakistan’s GDP size is feared to be contracted by 15 percent from $330 billion in current financial year 2017-18 to almost $280 billion in 2018-19 and accordingly the per capita income that represents the average living standards of everyone in the country will decline by 16.7 percent from $1,640 to $1,366.

Though the National Accounts Committee will finalise the GDP size and per capita income and growth of economic sectors of economy by first week of May as the government has so far planned to present the budget of the country for 2019-20 on May 17 but this date is not yet finalised.

However, one of the National Accounts Committee members confirmed to The News that Pakistan’s GDP size is to decline in dollar terms to almost $280 billion from $330 billion showing the contraction by 15 percent. He said that per capita income will also plummet by almost 16.7 percent to $1,366 per person from $1,640. Keeping in view the eight months data and expected GDP growth that is to hover between 3.5 to 4 percent, it can easily be gauged that GDP size of the country is going to contract to $280 billion in dollar terms. To a question, he said the NAC will finalise the GDP growth based on the nine months data.

Member of Economic Advisory Council (EAC) and Principal and Dean of School of Social Sciences and Humanities at NUST Dr Ashfaque Hasan Khan also came up with the working about the GDP growth of the current financial year confirming that that GDP size is expected to go down to almost $280 billion. He said depreciation of Pak Rupee is far greater than the nominal GDP at price market owing to which size of the GDP will alarmingly shrink.

According to the NAC member, if the average exchange rate of dollar during the current year is set at Rs135 and fiscal deficit is kept close to 4 percent, the GDP size will climb down to $280 billion. To a question, he said the current value of dollar is at Rs143 and if it is assumed to go by June 30, 2019 up to Rs150 after joining the IMF programme, the average exchange rate will stand at Rs135.

Dr Ashfaque said that almost 1.5 million new entrants go to the market for jobs and they will get the jobs only when real GDP growth continued to stand at 7-8 percent every year, but this year as per State Bank of Pakistan, the current financial year 2018-19 will end up with growth at 3.5-4 percent and if Pakistan joins the IMF loan programme for three years then for next three years period the GDP growth will be the same at 3.5-4 percent. “This means that the economy will not be able to absorb new entrants in the market for jobs. Therefore, the pool of unemployed youth will keep growing,” he said.

Though Prime Minister Imran Khan has time and again announced that he will create 10 million jobs, but the ground reality bites as after IMF program, there will be no economic activity and GDP growth will continue to hover in the range of 3.5 and 4 percent. This growth, instead will reduce the jobs in the market till 2023.

In the presence of IMF loan programme, Dr Ashfaque said, the government will never be able to initiate and complete its flagship project of five million houses as the discount rate is expected to increase by 13-14 percent owing to which lending to private sector from commercial banks will be available at 16-17 percent.