Finance Minister Shaukat Tarin unveils Pakistan Economic Survey

KARACHI: Finance Minister Shaukat Tarin said 9.0 percent growth in large scale manufacturing (LSM) along with robust services sector performance enabled the country post 3.94 per cent GDP growth in first nine months of fiscal year.

Key Highlights:

§  Provisional GDP growth rate clocks in at 3.94% for FY21. GDP growth for FY20 was revised down to -0.47% from -0.38% earlier.

 

§  GDP at current market prices stood at PKR 47.7trn for FY21 (14.8% YoY).

 

§  Key growth sectors: Services 4.43%, Industrial 3.57% and Agriculture 2.77%.

 

§  Growth of important crops: wheat (8.1%), rice (13.6%), and maize (7.38%).

 

§  Sugarcane recorded the second-highest ever production at 22%. Other crops such as livestock and forestry grew 1.41%, 3.1% and 1.4%, respectively.

 

§  Cotton witnessed negative growth of 22.8% resulting in 15.6% decline in cotton ginning.

 

§  Industrial sector’s growth was primarily driven by unprecedented growth of 9.29% in LSM.

 

§  Service’s sector growth was mainly on the back of wholesale and retail trade segment (8.37%) and finance and insurance sector (7.84%).

 

§  Pakistan’s total public debt stood at PKR 38trn as at end of Mar’21. The domestic debt amounted to PKR 25.6trn (up 13.8% YoY) while the foreign public debt was PKR 12.5trn.

 

§  Average National Consumer Price Index (CPI) clocked in at 8.83% (as per 11MFY21 PBS data).

 

§  Pakistan’s fiscal deficit arrived at PKR 1.65trn in 9MFY21 (3.6% of GDP) compared to PKR 1.69trn in 9MFY20 (3.8% of GDP).

 

§  Remittances have clocked in at USD 26.7bn as per 11MFY21 SBP data, up 29% YoY.

 

§  Foreign Direct Investment (FDI) clocked in at USD 1,553mn during 10MFY21, down 32% YoY.

 

§  Pakistan recorded a Current Account surplus of USD 773mn in 10MFY21 against a deficit of USD 4,657mn recorded in the SPLY. During 10MFY21 total imports recorded an increase of 8% YoY to USD 48,625mn while exports have clocked in at USD 25,889 mn posting a jump of 6% YoY.

 

§  Trade deficit recorded a deficit of USD 22,736mn compared with a deficit of USD 20,599mn in 10MFY21, marking a jump of 11%.

 

§  The per capita income for FY21 in PKR terms stood at PKR 246,414 (+14.6% YoY) while in USD terms it was USD 1,543 (+13.4% YoY).

Unveiling the Pakistan Economic Survey 2020-21 on Thursday, Tarin said government was concentrating on long-term growth.

The Pakistan Economic Survey is an annual report on the performance of the economy, focusing in particular on major macroeconomic indicators.

Tarin said Covid-19 resulted in the economy’s contraction last year. However, the measures taken by the government helped the economy stabilise, resulting in improved growth performance.

“The government itself had set GDP growth target of 2.1 percent and the IMF predicted even lower growth. But the incentives accorded to manufacturing and textiles, construction sectors, and interventions in agriculture helped the economy recover”.

According to the survey, Pakistan has recorded a provisional growth rate of 3.94pc in the fiscal year 2020-21. This came “on the basis of a rebound in almost all sectors”.

According to the survey, automobiles with the help of rising demand topped the list with 23.4 per cent growth, followed by food and beverages (11.7 per cent), petroleum and coke group (12.7 per cent) and pharmaceuticals (12.6 per cent) while electronics, engineering products and leather witnessed contraction by 20.8 per cent, 25.5 per cent and 38.3 per cent, respectively. LSM grew by 9.3 per cent based on July-March 2020-21 versus contraction of 5.1 percent in the same period of last year.

Services sector was worst affected by the Covid impact of last year owing to falling tourism revenues, lower mobility in the transport sector (air, rail, ships and roads), lockdown inflicted complete cessation of trading activities, closure of educational institutions, event management and community services and major burden on financial sector because of falling interest rates and business financing.

The agriculture sector grew around 2.8 per cent, industrial sector registered a growth of 3.6 per cent against a target of 0.1 per cent, while services sector grew 4.4 per cent against a target of 2.6 per cent.

The minister said agriculture sector growth met its target despite the “cotton crop getting ruined” because yields of other crops compensated for that.

“We will do interventions and take care of the poor. The poor man has been crushed in this stabilisation phase because the dreams we have shown them have been of a trickledown economy. And this can only happen when growth is sustainable and continuous for 20-30 years,” he said.

Tarin, however, emphasised that this growth should not be based on borrowing.

Federal Board of Revenue (FBR) tax collection came in at Rs3.78 trillion, registering double-digit growth of 14.4 per cent during July-April FY2021 against Rs3.3 trillion in the same period last year.

The government had set a revised target of Rs4.69 trillion for Federal Board of Revenue (FBR), which was surpassed by more than Rs100 billion, according to the survey document.

During July-March FY2021, current account posted a surplus of $959 million (0.5 per cent of GDP) against a deficit of $4.147 billion last year (2.1 per cent of GDP).

“The main driver of improvement in current account balance was the robust growth in remittances,” Survey stated.

“The inflows accelerated posting a year-on-year growth of 26.2 percent during the period under review over the same period last year and thus defying the general expectation of a decrease,” it further noted.

The finance minister said Pakistan’s total debt had increased nominally in the last 9 months.

He said Pakistan’s total debt increased Rs1.67 trillion in FY21 to reach Rs38 trillion. Of this Rs25 trillion is local debt while around Rs12.5 trillion is foreign debt.

The economic survey revealed that before the start of the Covid-19 pandemic, 35 per cent of Pakistan’s population or 55.7 million people were employed. This number decreased by around 20 million to 35 million after lockdowns were imposed.

“In July 2020, the government announced a package for construction sector. Thus, opening of sectors in which daily wagers were working along with fiscal stimulus and monetary measures made economy recover,” it said. As a result, people started working again and the total number of employed people rose to 52.5 million or 33 percent of the population.

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