ISLAMABAD: Pakistan’s economy suffered a major setback with all key sectors failing to perform according to expectation in the wake of coronavirus outbreak resulting in a negative 0.38 per cent economic growth rate this fiscal year, compared to 1.91pc growth in 2018-19.
For a number of years, the services sector was a major reason for economic growth in the country and it has witnessed a rare contraction of 0.59pc this year. In Pakistan, the services sector has been impacted by the Covid-19 related shrinkage in service delivery in major sectors. However, the agriculture sector posted a paltry growth while industrial output plunged.
Growth of agricultural and industrial services sectors is 2.67pc, and negative growth of 2.64pc respectively said an official announcement on Monday, painting a dismal performance of the overall economy in the second year of Pakistan Tehreek-i-Insaf government.
The government had anticipated 3.5pc growth in agriculture, 2.3pc in industry and 4.8pc in services for the year 2019-20.
Provisional estimates show contraction not as severe as IMF or WB projected
These figures were framed in the 102nd 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 2019-20 for GDP and Gross Fixed Capital Formation (GFCF) have been presented on the basis of the latest data available for six to nine months.
The provisional estimates were also annualized by incorporating the impact of Covid-19 followed by the partial lockdown for the final quarter.
Pakistan’s GDP size stands at Rs41.727 trillion for 2019-20 compared to Rs37.972 tr in the previous year, showing a growth of 9.9pc. But contrary to this, the GDP size fell to $263.54 billion in the year 2019-20 against $283bn in 2018-19, a decline of 6.8pc. The size of the economy shrank in dollar terms as the rupee weakened against the greenback.
The per capita income for 2019-20 has been calculated as Rs214,539 for 2019-20 compared to Rs198,028 during 2018-19, showing a growth of 8.3pc. The per capita income in dollar terms has fallen by 10.4pc to $1,358 from $1,516 in the last financial year.
The agriculture sector grew by 2.67pc, where the target was 3.5pc. The growth occurred mainly in important crops during this year - production of wheat, rice and maize came in at 2.45pc, 2.89pc and 6.01pc, respectively.
However, cotton and sugarcane crops saw negative growth of 6.92pc and 0.44pc, respectively. Other crops--onion, potato, and vegetables showed positive growth of 4.57pc mainly because of an increase in production of pulses, oilseeds and vegetables.
Livestock sector registered a growth of 2.58pc, which is a deviation from its historical growth primarily because of shrinkage in demand for dairy and poultry. Forestry has grown at 2.29pc due to an increase in the production of timber.Industrial Sector:
The overall industrial sector saw negative growth of 2.64pc mainly because of Covid-19 related lockdown of industrial units. The value-added in the mining and quarrying sector declined by 8.82pc.
The large scale manufacturing (LSM) sector, which is driven primarily by QIM data (from July 2019 to March 2020), showed a decline of 7.78pc. Major decline has been observed in textile (-2.57pc), food, beverage & tobacco (-2.33pc), coke & petroleum products (-17.46pc), pharmaceuticals (-5.38pc), chemicals (-2.30pc), automobiles (-36.5pc), iron & steel products (-7.96pc), electronics (-13.54pc), engineering products (-7.05pc), and wood products (-22.11pc).
The major positive growth in LSM came in fertilizer (5.81pc), leather products (4.96pc), rubber products (4.31pc) and paper &board (4.23pc). Electricity and gas sub-sector has grown by 17.70pc mainly due to higher subsidies and better value-added in WAPDA & Companies. Construction activity has increased by 8.06pc mainly due to an increase in general government expenditure.
Pakistan’s services sector has remained major growth driver for many years but it underwent a rare contraction of 0.59pc this year. While the wholesale and retail trade sector contraction by 3.42pc, the transport, storage and communication sectors have negative growth of 7.13pc.
Finance and insurance sector showed modest increase of 0.79pc. The remaining components of services--housing, general government and other private services saw positive growth of 4.02pc, 3.92pc and 5.39pc, respectively.
Published in Dawn, May 19th, 2020