It has been recently reported that Pakistan has achieved the highest annual growth of 5.3% in a decade. The GDP growth has put Pakistan in the list of economies that are valued at $300 billion or more. According to the reports, the GDP growth was led by agriculture and services sectors. However, these are provisional figures and subject to change once the final figures are available by the end of the current fiscal year i.e. June 30, 2017.
Since 2008, this is the first time that Pakistan has managed to achieve GDP growth of more than 5%. Experts attribute the economic growth to the business friendly policies of the administration, and political stability in the country. The economy has recovered slowly and gradually during the last four years and after the GDP growth, Pakistan’s economy has now reached $304.4 billion mark.
It is pertinent to mention here that the government has set the GDP growth target at 5.7%, which it failed to achieve. However, the growth recorded is still better than what International Monetary Fund (IMF) predicted i.e. 5%.
The growth was led by the services sector that contributed about 67% in the GDP, which is better than what the government was expecting. Even the agricultural sector grew at 3.5% after witnessing flat growth in the last fiscal year. PML-N government has a history of favoring the industrial sector, but in the current fiscal year focus on the agricultural sector resulted in the growth of major crops by 4.1%.
Forestry sector and cotton grinning also performed better than expected and recorded growth of 14.5% and 5.6% respectively. Industrial sector, despite garnering favors from the government, like no load shedding, stood only at 5% as compared to the set target of 7.7%. Small scale manufacturing witnessed a massive growth of 8.1% while large scale manufacturing stood at 4.9% only.
Services sector benefited from the increase in money supply along with massive borrowings from the government, which led to 6% growth in the sector. However, the government was expecting 5.7% growth in the services sector. Finance and insurance experienced growth of 10.8% against a target of 7.2%.
The current account deficit for the current fiscal year has widened further and the deficit will stand at $8.3 billion by the end of June 30. Exports during the current fiscal year are expected to remain at $21.7 billion, whereas imports will cross $45.2 billion mark. The government’s lack of focus on value addition sectors remained a major problem for exports.
During the current fiscal year only 11 out of the 20 key growth indicators achieved the target set out by the government, while the rest of them missed out.
Yesterday, in an interview with Japanese Nikkei Asian Review, Finance Minister Ishaq Dar said that Pakistan has set GDP growth target for the next fiscal year at 6%.