Pakistan’s GDP Growth Highest in Decade: Economic Survey

Economy of Pakistan has continued the growth momentum as the GDP growth reached to 5.28 percent in 2016-17 which is the highest in 10 years, on the back of rebound growth in agriculture which registered a growth of 3.46 percent against the growth of 0.27 percent last year, claimed economy survey of Pakistan for 2016-17.

Industrial sector witnessed the growth of 5.02 percent against 5.80 percent last year, large scale manufacturing posted growth of 4.61 percent against 3.29 percent last year, while Services sector surpassed its target and recorded 5.98 percent growth as compared to 5.55 percent last year.

The share of commodity producing sector has reached to 40.41 percent of GDP during out going FY2017 as compared to 40.80 percent last year. It grew by 4.3 percent during FY2017 as compared to 3.0 percent during FY2016.

Agriculture accounts for 19.53 percent of GDP and employed bulk of the total work force. Agriculture sector recorded a growth of 3.46 percent in FY 2017 as compared to the growth of 0.27 percent last year. The crops subsector comprises of 37.22 percent of agriculture sector and is the basic driver of growth of the agriculture sector as well as GDP on the whole.

Crops sub sector recorded a growth of 3.02 percent as compared to the growth of (-4.97) percent last year. Important crops accounting for 23.85 percent of value added of agriculture, its share in GDP is 4.66 percent. Important crops recorded a growth of 4.12 percent in FY2017 as compared to (-5.47) percent last year. Other crops have contributed 11.03 percent in agriculture sector and its share in GDP is 2.15 percent in FY 2017. This sub-sector has registered a growth of 0.21 percent against the growth of 0.59 percent last year.

Cotton Ginning has a 2.34 percent contribution in agriculture sector and in GDP its share is 0.46 percent. This sub-sector grew at 5.59 percent as compared to negative growth of (-22.12) percent. Livestock’s share in agriculture sector stood at 58.33 percent while it contributes 11.39 percent in the GDP. Livestock during outgoing fiscal year grew by 3.43 percent as compared to 3.36 percent last year. Forestry subsector has registered a growth of 14.49 percent as compared to growth of 14.31 percent last year.

Fisheries contribute 2.12 percent in agriculture and its share in GDP is 0.41 percent; its growth remained at moderate 1.23 percent against the growth of 3.25 percent last year.

Industrial sector contributed 20.88 percent in GDP. This year it recorded a growth of 5.02 percent as compared to 5.80 percent last year.

Manufacturing is the most vibrant subsector of the industrial sector having 64.4 percent contribution in the industrial sector and in GDP it accounts for 13.45 percent.

Manufacturing sub-sector is further divided in three components including large-scale manufacturing (LSM) with the share of 51.26 percent in industrial sector, small scale manufacturing share is 8.80 percent in industrial sector, while Slaughtering contributes 4.34 percent in the industry.

Small scale manufacturing recorded a growth of 8.18 percent in outgoing fiscal year against the growth of 8.20 percent last year and slaughtering maintained the growth rate of last year at 3.61 percent. Construction as a sub sector contributes 13.13 percent in industrial sector and in GDP its share is 2.74 percent against the share of 2.65 percent last year; it absorbs 7.31 percent of labor force.

Construction is considered as one of the potential components of industrial sector in the economy of Pakistan. This sub-sector has witnessed a growth of 9.05 percent against the growth of 14.60 percent last year.

Mining and quarrying contributes 13.91 percent in industrial sector and its share in GDP is 2.90 percent. Mining and quarrying has recorded a growth of 1.34 percent against the growth of 6.86 percent last year.

Electricity generation & distribution and Gas Distribution contributes 8.55 percent in industrial sector and in GDP its share is 1.78 percent. This sub-sector has recorded a growth of 3.40 percent during the outgoing fiscal year as compared to 8.43 percent growth last year.

Services sector grew at 5.98 percent against the commodity producing sector growth of 4.26 percent. The share of the services sector has reached to 59.59 percent of GDP in FY 2017. Services sector has witnessed a growth of 5.98 percent as compared to 5.55 percent last year.

Wholesale and Retail Trade Sector contributes 18.50 percent in GDP and is also the largest subsector of the services having share of 31.1 percent in the services sector. Wholesale and Retail Trade recorded a growth of 6.82 percent against the target of 5.5 percent, whereas it grew at 4.25 percent last year. Transport, Storage and Communication having a contribution of 13.27 percent in the GDP and has a share of 22.3 percent in services sector; moreover, directly and indirectly it plays an important role in improvement of economic activities in all sectors of the economy. The transport, storage and communication registered a growth of 3.94 percent as compared to 4.82 percent last year.

Finance and Insurance contributes 5.7 percent in services sector and its share in GDP is 3.37 percent in FY 2017. Finance and Insurance comprises the State Bank of Pakistan; all scheduled Banks (domestic and foreign), Development Financial Institutions (DFIs), all Insurances companies, modaraba/leasing companies, money changers and Stock Exchange Brokers.

The financial sub-sector consists of all resident corporations principally engaged in financial intermediations or in auxiliary financial activities related to financial intermediation.

Finance and insurance witnessed a significant growth of 10.77 percent as compared to 6.12 percent last year. General government services contribute 12.8 percent in services sector and its share in GDP has reached to 7.61 percent in outgoing FY 2017. It has recorded a growth of 6.91 percent as compared to 9.72 percent last year. Housing Services (Ownership of Dwellings) having contribution of 11.1 percent in services sector and its share in GDP is 6.64 percent during FY 2017.

This sub-sector has maintained the growth of 3.99 percent as targeted for FY 2017. Other private services have a share of 17.1 percent in services sector and its contribution in GDP has reached to 10.20 percent in FY 2017. Other private services witnessed a growth of 6.28 percent as compared to 6.78 percent last year.

Consumption, investment and exports are the main drivers of economic growth under the expenditure approach, which is also recognized as aggregate demand side of the economy. During FY2017 the growth continued the previous trend with major contribution by private consumption largely due to remittances inflows, better growth in agriculture, small scale manufacturing and services sector.

Consumption shared 7.92 percentage points to overall economic growth, while the investment contributed 1.28 percentage points, and net exports contribution is negative (-3.52) percentage points.

Total investment has reached to the level of Rs 5027 billion as compared to the Rs 4527 billion last year, showing the growth of 11.04 percent in FY 2017.

Investment to GDP ratio has reached to 15.78 percent in FY 2017. Fixed investment have increased to Rs 4517 billion as compared to Rs 4061 billion last year, and recorded growth of 11.23 and fixed investment as percentage of GDP is recorded at 14.18 percent. Private investment has registered a growth of 6.63 percent and private investment as percentage of GDP reached to 9.90 percent.

Whereas public investment grew by 23.55 percent and as percentage of GDP it has increased from 3.79 percent to 4.28 percent, which is the clear reflection government expenditure strategy is development oriented.

It has spillover effects on private sector investment as private sector development is facilitated through public sector development spending particularly on infrastructure. Public Sector Investment increased by Rs 1363 billion in FY 2017 compared to Rs 1103 billion in FY 2016.

National savings plays a dominant role in achieving desired level of investment to reach the planned target of economic growth. Contribution of national savings to domestic investment is the mirror image of foreign savings required to meet the investment demand.

The foreign savings are needed to finance saving investment gap, reflects the current account deficit in the balance of payments. National savings reached to 13.1 percent of GDP in FY2017 against 14.3 percent last year. Domestic savings are recorded at 7.5 percent of GDP in outgoing fiscal year as compared to 8.2 percent of GDP last year.

Per Capita Income in dollar terms has witnessed a growth of 6.4 percent in FY 2017 as compared to 1.1 percent last year. The per capita income in dollar terms has increased from $ 1,531 in FY 2016 to $ 1,629 in FY 2017. Main contributing factors for the rise in per capita income are higher real GDP, growth, low population growth and stability of Pak Rupee.