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Islamabad [Pakistan]May 25 (ANI): Pakistan’s economic growth rate plummeted to 0.3 percent in the coming fiscal year amid severe import restrictions to avoid sovereign default, paralyzing the industrial sector with spillover effects from the services sector, The Express Tribune reports.
The 0.29% growth rate was the slowest increase in national output in the past four years, exposing a mismanaged economy that is woefully inadequate to meet the needs of 250 million people.
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Despite severe flooding, the agriculture sector posted growth of 1.6%, beating all forecasts for contraction due to devastating effects on crops. According to the Tribune, the industrial sector contracted by 2.94%.
But services, the largest single sector in the economy, grew at a nominal 0.9 percent rate.
This article was written by Shehbaz Rana of The Express Tribune. The Express Tribune is Pakistan’s first internationally affiliated newspaper.
The government has failed to meet all sector targets as economic mismanagement led to mass layoffs and a 59-year high inflation rate of 36.4%.
The National Accounts Committee met on Wednesday night in contentious fashion to approve provisional gross domestic product (GDP) growth rates for the 2022-23 fiscal year ending June 30. Planning Minister Zafar Ali Shah chaired the meeting, The Express Tribune reported.
The outgoing fiscal year will go down as a banner one in Pakistan’s history, which has seen devastating floods wash away crops, economic mismanagement and a sharp drop in people’s purchasing power due to record inflation.
The government has wreaked havoc on the economy by devaluing the rupee and raising utility prices in the hope of getting a deal from the International Monetary Fund (IMF).
In the end, the IMF program couldn’t be revived and the economy couldn’t be saved from disaster.
The planning secretary announced after the National Accounts Committee meeting that the provisional gross domestic product (GDP) growth rate for 2022-23 is estimated at 0.29%, according to the Express Tribune.
The government has postponed the NAC meeting four times in a week amid disagreements over increasing national output, sources said. Some Pakistan Statistics officials shuttled from one office to another to reach a consensus, the source added.
According to The Express Tribune, Planning Commission chief economist Nadeem Javaid said it was a growth recession, but not a recession for the economy as a whole.
Economic output generally declined, mainly because of government mismanagement and the adverse impact of floods. According to The Tribune, GDP is the monetary value of all goods and services produced in a year.
The nearly 0.3 percent growth rate is well below the official target of 5 percent and is in line with estimates from the Finance Ministry, State Bank of Pakistan, International Monetary Fund, World Bank and Asian Development Bank.
All agencies forecast economic growth of 0.2% to 0.8%.
This figure is provisional and subject to change once final results are available at the end of the financial year. The economic growth rate for the final year of the PTI rule was 6%, which was further revised to 6.1% by the NAC on Wednesday.
Even provisional nominal growth rates may be controversial after initial estimates point to normal contraction. Leading economist Hafiz Pasha estimated that the economy actually contracted by more than 3% in the outgoing fiscal year, The Tribune reported.
The details show that massive restrictions on imports and consumption have dragged down the economic growth rate, which has triggered a severe external sector crisis, the same as it did when the country fell into the arms of the International Monetary Fund in 2018.
Last year, Pakistan’s Tehreek-e-Insaf government ended with growth of 6.1%, the highest in four years. The country last posted growth of 6.1% in 2017-18, the final year of the PML-N rule, which was also driven by consumption and imports and brought the country back to the IMF.
During 2017-2018 and 2021-2022, Pakistan’s growth will be mainly financed through foreign savings, which is very unsustainable. The agricultural sector is initially estimated to grow by 1.6 percent compared to the official target of achieving a growth rate of 3.9 percent.
The increase, which seems surprising, may be the result of an increase in flood costs of around PKR 500 billion, according to the Express Tribune.
Floods have washed away key crops, causing food shortages and destroying people’s bread and butter. In the last financial year, the agricultural sector grew by 4.3%.
PBS chief statistician Naeem ul Haq said the growth in the agricultural sector was supported by good harvests of wheat (27.6 million tons) and sugarcane (9.1 million tons).
The chief statistician denied he was under any pressure to turn negative growth into positive growth.
The industrial sector contracted by 2.94%, against a target of 7.4% growth.
The government itself stifled industrial growth by restricting imports, causing shortages of raw materials and closing factories. Still, the contraction appeared smaller than signs of a sharp slowdown in major industries, according to the Tribune.
In the last fiscal year, the industrial sector grew by 6.8%. The State Bank of Pakistan also raised interest rates to a record 21% in a bid to curb inflation. But the central bank failed to curb inflation, which was already above 36.4%.
The government has set a 4% growth target for the services sector. But services posted a marginal growth rate of 0.9 percent, according to provisional figures. According to the NAC, the services sector grew 6.6 percent in the last fiscal year, The Tribune reported.
The NAC also raised the PTI government’s economic growth rate for the second year last year to 6.1 percent from 6 percent. The final GDP growth rate for 2020-21 was revised to 5.8%. (Arnie)
(This is an unedited and auto-generated story from a Syndicated News feed, the content body may not have been modified or edited by LatestLY staff)
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