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Economy suffers major setback in FY19, growth rate slows to 3.3pc

Updated May 10, 2019

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Govt has anticipated 3.8pc in agriculture, 7.6pc in industry and 6.5pc in services, thus target of 6.2pc GDP growth.
Govt has anticipated 3.8pc in agriculture, 7.6pc in industry and 6.5pc in services, thus target of 6.2pc GDP growth.

ISLAMABAD: Pakistan’s economy suffered a major setback with all key sectors failing to perform according to expectations resulting in just 3.3 per cent economic growth rate, significantly short of 6.2pc growth target for the year 2018-19.

“Growth of agricultural, industrial and services sectors is 0.85pc, 1.4pc and 4.7pc respectively,” said an official announcement on Thursday, painting a dismal performance of the overall economy in the first year of Pakistan Tehreek-i-Insaf government. “The provisional growth of GDP for the year 2018-19 has been estimated at 3.3 pc”.

The government has anticipated 3.8pc in agriculture, 7.6pc in industry and 6.5pc in services, thus target of 6.2pc GDP growth. All these targets fell flat.

These figures were framed in the 101st meeting of the National Accounts Committee — chaired by Secretary Planning, Development and Reform Zafar Hasan — to review the Gross Domestic Product (GDP). Provisional estimates for the year 2018-19 for GDP and Gross Fixed Capital Formation (GFCF) have been presented on the basis of the latest data available for six to nine months.

As per the available data, the crop sector faced the consequences of acute water shortages during the first half of the 2018 and thus only wheat depicted positive growth of 0.5pc and cotton, rice and sugarcane witnessed negative growth at -17.5pc, -3.3pc, and -19.4pc, respectively.

Other crops (such as onion, tomatoes and fruits) showed growth of 1.95pc mainly because of increase in production of pulses and oil seeds. Livestock sector registered a growth of 4pc whereas forestry has grown at 6.5pc due to increase in production of timber.

Agriculture sector is targeted to grow by 3.8 percent on the basis of expected contributions of Important Crops (3pc), other crops(3.5pc), cotton ginned (8.9pc), livestock (3.8 pc), fisheries (1.8 pc) and forestry (8.5 pc). All these targets were missed except the one related to livestock.

The overall industrial sector on the other hand showed an increase of 1.4pc. The mining and quarrying sector declined by 1.96pc. The large scale manufacturing (LSM) sector, which is driven primarily by QIM data (from July 2018 to February 2019), showed a contraction of 2.1pc.

Electricity and gas sub-sector has grown by 40.5pc mainly due to better performance of Wapda and distribution companies and IPPs. The construction activity has decreased by 7.6pc.

Industrial sector is targeted to grow by 7.6pc during 2018-19. Manufacturing sector is targeted to grow by 7.8pc with LSM growth rate of 8.1pc, small scale and household manufacturing 8.2pc, construction 10pc and electricity generation and distribution and gas distribution by 7.5pc.

Services sector remained major contributor to economic growth as its value added increased by 4.7pc. Within services sector, wholesale and retail trade sector grew by 3.1pc whereas transport, storage and communication sector has registered a growth of 3.3pc.

Finance and insurance sector shows an overall increase of 5.1pc on account of positive contributions from scheduled banks (5.3pc), non-schedule banks (24.6pc) and insurance activities (12.8pc) despite decline in central banking by 12.5pc. General government services has grown by 7.99pc and other private services, a set of computer related activities, education, health and social work, NGOs etc. has contributed positively at 7.1pc.

Published in Dawn, May 10th, 2019