Pakistan Economic Survey 2017-18 : Pakistan achieves 13 years highest growth rate of 5.8%

The country’s Gross Domestic Product (GDP) recorded 13-year highest growth of 5.8 percent during the outgoing fiscal year (2017-18), indicating success of the government’s growth-oriented initiatives and prudent economic policies introduced for the economic development of the country. “Had we not gone through political crisis, which created uncertainty, we would have exceeded the growth target of 6 percent during the outgoing fiscal year,” said Federal Minister for Planning, Development and Reforms, Prof Ahsan Iqbal at the launching of Pakistan Economic Survey for the outgoing fiscal year (2017-18) in Islamabad on Thursday.

The survey was launched by Adviser to Prime Minister of Finance, Miftah Ismail while among others Adviser to Prime Minister on Revenue, Haroon Akhtar, Minister of State for Finance Rana Muhammad Afzal, and Economic Adviser Finance Division Ejaz Ali Wasti were also present on the occasion.

Ahsan Iqbal said that despite these challenges, the government succeeded in achieving 5.8 percent growth rate, and expressed the hope that the momentum would continue in years to come. The minister was of the view that there was dire need to avoid political adventurism, if we had to put the country on path of development and progress.  He said that Pakistan had made great strides in improving its economic outcomes and reducing its macroeconomic vulnerability in the recent years. As a result, economic growth has continued to gain traction, albeit at varying speeds across the sectors, founded on the government’s commitment to higher growth and low inflation.

GDP continued to grow above 5 percent in each of the last 2 years and 4 percent in each of the three preceding years. This achievement is remarkable as it has been accomplished in the face of global head winds. “We have turn around the economy of Pakistan and the measures introduced by the government had put the economy on path of sustainability,” the minister added. The minister said that the growth was not only endorsed by the government but also by world organizations including the World Bank, which he said was an encouraging sign. He said that Pakistan’s growth rate remained stagnant at only 3 percent growth during the period from 2008 to 2013, while now it had achieved 5.8 percent growth.

He said that the government had ensured construction of 1750 km of motorways during previous five years and the country had even surpassed the neighboring country in that regard where total length of motorways is around 1400 km. The minister said that during next fiscal year, a big portion of development funds had also been earmarked for the China Pakistan Economic Corridor (CPEC) projects. He said so far a huge investment of US$29 billion had been made on various projects of CPEC while more investment is expected in the second phase of CPEC in sectors including energy, infrastructure, and Gwadar port development.

Miftah Ismail on the occasion said that the macroeconomic indicators had shown satisfactory performance during the outgoing fiscal year as Gross Domestic Product (GDP) growth rate was recorded at the all-time high in 13 years at 5.8 %.

He said that all the economic indicators have shown positive growth while the government succeeded in containing inflation rate at 3.8 % while current year will end with around 4.5 %,” he said adding the deficit which was 8.2 % in 2013 will remain at 5.5 % by the end of current fiscal year.

He said revenues of Federal Board of Revenue (FBR) will be around Rs 3935 billion by the end of year, while the revenues in 2013 were only Rs 1980 billion. However, the net debt to GDP ratio, he said had increased from 60.2 % to 61.4 % now. He said the external debt to GDP ratio remained 20.5 % which was low as compared to the ratio of 21.14 % in 2013. “Our current expenditures have declined while the development expenditures have increased considerably,” he said adding, “We have added 12000 MW to national grid in five years, we completed the long awaited projects such as Neelum Jhelum power project and Lowari Tunnel project, which were lingering for decades and we also concluded Tarbela-IV project.”

The adviser said these development expenditures were now giving dividends as the country witnessed the highest growth rate of 5.8 % in 13 years.

He said the weak point remained the declining exports during the first four years, however he informed that with the start of current calendar year, the exports have captured the upward trend as during March only, 24 % growth of exports was recorded compared to same month of the year 2017.

According to the survey, the highest growth of 3.81 percent in agriculture sector in last 13 years was achieved on the back of initiatives taken to improve the sector such as expansion in credit to agriculture sector along with agriculture Kissan Package, provision of better quality seeds including hybrid and high yield varieties and timely availability of agriculture inputs including fertilizer, pesticides etc.

Large Scale Manufacturing (LSM) also recorded a growth of 6.13 percent highest in ten years. Industrial sector growth improved by 5.80 percent, highest in ten years. Manufacturing grew by 6.24 percent highest in 11 years. The performance of services sector witnessed a stable growth of 6.43 percent in last two years while the Mining and Quarrying sector grew by 3.04 percent in FY 2018 as against -0.38 percent last year.  Fiscal sector continued to perform well during the first half of current fiscal year as strong growth in revenues relative to expenditures helped in containing the fiscal deficit to 2.3 percent of GDP during first half of FY2018 as compared to 2.5 percent of the corresponding period last year.

Total revenues grew by 19.8 percent to reach Rs 2,384.7 billion (6.9 percent of GDP) during July-December, FY2018 against Rs 1,990.6 billion (6.2 percent of GDP) in the same period of FY2017. The impressive performance both in tax and non-tax revenues attributed to this significant rise in total revenues.

According to the survey, during the current fiscal year, CPI increased to 4.6 percent which was the highest since the start of current fiscal year, in January 2018 it came down to 4.4 percent and in March 2018, it fell eight-month low to 3.2 percent on account of subdued food prices, which offset the impact of rise of petroleum prices.

The average inflation during first nine months of the current fiscal year, July-March FY 2018 has been contained at 3.78 percent which was lower than the level observed during the same period of last year recorded at 4.01 percent.

Exports during July-March FY2018 reached to US$ 17.1 billion as compared to US$ 15.1 billion in July- March FY2017, registered a growth of 13.1 percent.

Pakistan’s imports were up by 15.7 percent in the first nine months of the current fiscal year, rising from $ 38,369 million during FY2017 (July- March) to 44,379 million, showing an increase of $ 6010 million in absolute term. To slow down the imports, an additional regulatory duty was imposed to curtail the inflated imports.  Meanwhile, total public debt stood at Rs 22,820 billion at end of December 2017, while Total Debt of the government was Rs 20,878 billion. Total public debt recorded an increase of Rs 1,413 billion during the first six months of current fiscal year. According to the survey, the government scrutinized pro-poor expenditure in 17 sectors through the Medium Term Expenditure Framework (MTEF) under PRSP-II. The provisional expenditures for July-December FY 2017-18 have been estimated at Rs 1,134.1 billion as compared to Rs 1,017.5 billion of the corresponding period last year.

The number of BISP beneficiaries increased from 3.73 million in FY 2012-13 to 5.6 million as on December 31, 2017. BISP’s annual disbursement increased from Rs 16 billion in FY 2008-09 to Rs 121 billion in FY 2017-18. The quarterly cash grant enhanced from Rs 3000 per family in FY 2012-13 to Rs 4834 in FY 2016-17. (courtesy APP and PID)

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