Govt sets growth targets for next fiscal year

ISLAMABAD: Despite envisaging nominal growth of 12.5 percent including GDP growth of 4 percent and rising inflation of 8.5 percent for next fiscal, Pakistan’s size of economy and per capita income will continue to shrink in dollar terms in the upcoming budget because of steep fall of exchange rate.

The average yearly inflation is projected to go up to 8.5 percent indicating that the monthly inflation will go into double digit in coming financial year against 7.5 percent in outgoing financial year 2018-19. Initially the inflation target was envisaged at 6 percent for the current fiscal year.

The size of the economy in dollar terms that stood at $290 billion in outgoing fiscal year, will further decline because of the steep fall of exchange rate. The average rupee-dollar parity stood at Rs134 in outgoing fiscal and it would be standing at least around Rs150 in the upcoming budget.

The Annual Plan Coordination Committee (APCC) on Thursday under chairmanship of Minister for Planning Makhdoom Khusro Bakhtyar approved macroeconomic framework for 2019-20, envisaging current account deficit bringing down from revised estimates of 4.7 percent of GDP for outgoing fiscal year to 3 percent of GDP for 2019-20, equivalent to $8.6 billion for the next financial year.

Total investment to GDP is projected at 15.8 percent in next fiscal year against 15.4 percent for the outgoing financial year. The investment to GDP ratio was initially targeted at 17.2 percent for the current financial year. The savings to GDP ratio is envisaged at 12.8 percent for next budget against 10.7 percent for the outgoing financial year.

The real GDP growth target has been envisaged at 4 percent with contribution of agriculture growth at 3.5 percent, industrial growth 2.3 percent and large scale manufacturing 1.5 percent, construction 1.5 percent and services sector 4.8 percent for the next fiscal year 2019-20. In agriculture sector, the government has envisaged growth target of 3.5 percent for next fiscal year against provisional estimates of 0.8 percent of outgoing financial year. The agriculture growth target was missed out with massive margin as it was envisaged at 3.8 percent for current fiscal year 2018-19. The government has envisaged target of important agri crops at 3.5 percent for upcoming fiscal year against provisional estimates of negative 6.5 percent for the outgoing fiscal year.

The important crop target was initially envisaged at 3 percent for the current fiscal year.

With industrial sector growth of 2.3 percent for next fiscal year against 1.4 percent for outgoing fiscal year, the Large Scale Manufacturing (LSM) is envisaged to grow at 1.5 percent in 2019-20 against negative 2 percent in outgoing financial year.

The electricity generation and gas distribution is targeted to grow at 1.5 percent in the upcoming fiscal year against provisional estimates of 40.5 percent growth in the outgoing financial year. The construction sector that achieved negative growth of 7.6 percent in outgoing fiscal year is now targeted to grow at 1.5 percent for the next financial year. The commodity production sector is set to grow at 2.9 percent in next fiscal against 1.1 percent for the outgoing fiscal year. The services sector is projected to grow at 4.8 percent in next fiscal against 4.7 percent in outgoing fiscal year. The services sector was initially envisaged to grow at 6.5 percent for the current fiscal year.

The whole sale and retail trade is targeted to grow at 3.5 percent for the next fiscal against 3.1 percent for the outgoing fiscal year.

The transport, storage and communication is projected to grow at 3.8 percent, finance and insurance 6.5 percent, housing services 4 percent, general government services 5.7 percent and other private services 7.1 percent in next fiscal year 2019-20. Total investment for 2018-19 was recorded at 15.4 percent of GDP compared with 16.7 percent in 2017-18. The fixed investment is now projected at 14.2 percent of GDP in 2019-20 against 13.8 percent in outgoing fiscal year.

The private sector investment in percentage of GDP has been envisaged at 10.1 percent for next fiscal year against 9.8 percent for the outgoing fiscal year.