ISLAMABAD: The growth rate forecast of Pakistan’s economy increased significantly during 2021-22, making it the second-highest economic growth recorded over the past four years suggesting recovery of the economy from the Covid-19 pandemic.

The projection that Pakistan’s economy will grow at a rate of 5.97 per cent in 2021-22 is much higher than the projections of 4pc and 4.3pc by the International Monetary Fund and the World Bank, respectively, for the same year.

This projection came as a surprise when it was feared the fuel subsidies will ditch the growth forecast. The growth was mainly contributed by the industrial sector, followed by services and agriculture sectors. In the agriculture sector, a robust growth was seen in four major crops — cotton, rice, sugarcane and maize — while a dip was noted in wheat production.

The 105th meeting of the National Accounts Committee, chaired by Planning Secretary Dawood Muhmmad Bareach, approved the figures of gross domestic product (GDP) for the fiscal year 2021-22 and revised figure for 2020-21.

Forecast much higher than IMF, World Bank projections

An upward trend in the growth was also seen in the revised figures for the year 2020-21, when it was estimated at 5.74pc, which was provisionally projected at 5.57pc.

The size of the economy rose to $380 billion in 2021-22 from the revised figure of $346.76bn the previous year. The size of the economy grew in dollar terms as the rupee strengthened against the greenback — the highest-ever increase in any year.

Per capita income has also been calculated at Rs314,353, up from Rs268,223 for 2020-21. The per capita income in dollar terms has jumped to $1,798 from previous year’s projections of $1,676.

The revised GDP growth rate for the year 2020-21 is 5.74pc, which was provisionally estimated at 5.57pc. The crops sub-sector has improved from 5.92pc to 5.96pc. Other crops have improved from provisional growth of 8.08pc to 8.27pc in revised estimates. The industrial sector’s growth in the revised estimates is 7.81pc, which was 7.79pc in the provisional estimates, while the services sector’s growth has improved from 5.7pc to 6pc.

The provisional GDP growth rate for the year 2021-22 is estimated at 5.97pc. This is the outcome of a broad-based growth witnessed in all sectors of the economy. The growth in agricultural, industrial and services sectors is 4.40pc, 7.19pc and 6.19pc, respectively. The growth in the agriculture sector was achieved despite a fall in wheat production.

The growth in important crops during this year is 7.24pc against last year’s 5.83pc. The growth in production of important crops — cotton, rice, sugarcane and maize — are estimated at 17.9pc, 10.7pc, 9.4pc and 19pc, respectively.

Cotton crop production increased from last year’s 7.1 million bales to 8.3m bales; rice output from 8.4m tonnes to 9.3m tonnes; sugarcane production from 81m tonnes to 88.7m tonnes; and maize production rose from 8.4m tonnes to 10.6m tonnes.

Wheat production decreased from 27.5m tonnes in 2020-21 to 26.4m tonnes in 2021-22. Other crops showed growth of 5.44pc, mainly because of an increase in production of pulses, vegetables, fodder, oilseeds and fruits.

The livestock sector is showing a growth of 3.26pc this year against 2.38pc last year, forestry grows 6.13pc against a negative growth of 0.45pc last year and fishing stands at 0.35pc this year against 0.73pc last year.

The overall industrial sector shows an increase of 7.19pc in 2021-22, while it recorded a growth of 7.81pc in 2020-21. The mining and quarrying sector has declined by 4.47pc due to a fall in production of other minerals.

The large-scale manufacturing industry is driven primarily by QIM data (from July 2021 to March 2022) which shows an increase of 10.48pc. Major contributors to this growth are food (11.67pc), tobacco (16.7pc), textile (3.19pc), wearing apparel (33.95pc), wood products (157.5pc), chemicals (7.79pc), iron & steel products (16.55pc), automobiles (54.10pc), furniture (301.83pc) and other manufacturing (37.83pc).

The electricity, gas and water industry shows a growth of 7.86pc, mainly due to an increase in subsidies in 2021-22. Value added in the construction industry, mainly driven by construction-related expenditures by industries, has registered a modest growth of 3.14pc in 2021-22 against 2.48pc the previous year, mainly due to an increase in general government spending.

The services sector shows a growth of 6.19pc in 2021-22 against 6pc in 2020-21. The wholesale and retail trade industry grew by 10.04pc. It is dependent on the output of agriculture, manufacturing and imports. The growth in trade value added relating to agriculture, manufacturing and imports stands at 3.99pc, 9.82pc and 19.93pc, respectively.

The transportation and storage industry has increased by 5.42pc due to increase in gross value addition of railways (41.85pc), air transport (26.56pc), road transport (4.99pc) and storage. Accommodation and food services activities have increased by 4.07pc. Similarly, information and communication increased by 11.9pc due to improvement in telecommunication, computer programming, consultancy and related activities.

The finance and insurance industry shows an overall increase of 4.93pc, mainly due to an increase in deposits and loans. Real estate activities grew by 3.7pc, while public administration and social security (general government) activities posted a negative growth of 1.23pc due to high deflator. Education has witnessed a growth of 8.65pc due to public sector expenditure. Human health and social work activities increased by 2.25pc due to general government expenditures. The provisional growth in other private services is 3.76pc.

Published in Dawn, May 19th, 2022