KARACHI, Oct 29: Pakistan’s national growth profile shows a peculiar character, noted with concern by the State Bank of Pakistan, is increasing reliance on exceptional growth of key sub-sectors.
In its 2006-07 annual report released on Monday, the State Bank attributed 5 per cent growth in agriculture during 2006-07 entirely to 7.6 per cent increase in the major crops sub-sector.
Similarly, the acceleration in industrial sector growth is largely attributed to a sharp jump in the construction sub-sector which grew by 17.2 per cent in 2006-07. In the same way, the strong growth in the services sector is the result of a surge in finance and insurance as well as social services sub- sectors.
Agriculture, the report points out witnessed a moderate recovery in the year 2006-07. This was primarily due to a considerably improved performance of the cropping sub-sector, which overshadowed the impact of a moderation in the growth of livestock sub-sector. “The contribution of the remaining sub sectors to the overall agricultural growth was not material,’’ the report observed.
Three major crops - wheat, sugarcane and gram - showed exceptional strong growth that offset the impact of disappointing growth of two other key cash crops - cotton and rice. The report predicts a “positive outlook” for cropping sectors during 2007-08.
“It is likely that the sugarcane harvest may touch new heights’’ the report indicates and is well substantiated by the media reports that show that farmers are all set to harvest a record high crop of over 54 million tons this autumn.
The SBP report expects a ”possible recovery’’ of cotton crop this season which, however, is doubtful because of the pest infestation and viral attack that may reduce size to 12.5 million bales this season.
The latest SBP report also expects improvement in rice production during 2007-08 as over last season. This is also doubtful because rice crop is said to be under attack of pest.
In industry, construction sub-sector far exceeded the growth target of 7 per cent fixed for 2006-07 and ended up at 17.2 per cent growth. The large scale manufacturing witnessed a weaker performance but it remained the biggest contributor to the industrial sector.
The report attributed the resurgence in construction growth to the higher development allocation by the government, increase in remittances and increase in direct foreign investment.
Construction sector has only 2.3 per cent share in GDP, its share of employed labour force was disproportionately large at 6.1 per cent. According to the report, the national economy is now absorbing more construction related workers than before. The higher demand for construction workers is well reflected in a continued double digit rise in their wages.
Also to show 5.6 per cent growth in 2006-07 was mining and quarrying despite growing lawlessness in Balochistan and Northern Areas. The report points out tremendous growth potential of this sector if law and order is brought under control.
Electricity and gas distribution showed a negative growth of 15.6 per cent, relatively less than a fall of 23.8 per cent shown a year earlier.
Banking and insurance continue to be driving force behind the sustained growth of services sector. This sector is showing a sustained growth for last six years. The services sector is now all time high at 53.3 per cent of the national economy in 2007. Nonetheless, the data compilation process is not in line with the importance of services sector in the national economy.
