Pakistan’s GDP growth momentum continued as it achieved a 13-year high level at 5.7 percent in the closing financial year 2017-18. However, the country missed the set target of 6 percent which was predicted earlier by the different local and international think tanks.
Last year, Pakistan posted the highest GDP rate in the decade to settle at 5.28 percent against the target of 5.7%.
Pakistan Economic Survey 2017-18 reads:
The growth momentum remained above 5 percent for the last two years in a row and reached 5.79 percent in FY2018 finally, which is 13 years high mainly on the account of a strong performance in agriculture, industry and services sectors which grew by 3.81 percent, 5.80 percent and 6.43 percent, respectively.
Pakistan has seen a visible economic turnaround over the last five years, due to the successful implementation of a comprehensive program of economic revival aimed at higher economic growth and macroeconomic stability, it further stated.
Sectors Register Performance Records
The highest growth 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.
Major Kharif crops such as sugarcane and rice surpassed their production targets as well last year. They recorded a growth of 7.45 percent and 8.65 percent, respectively while cotton crop also exceeded last year’s production by 11.85 percent. Wheat and maize crop remained subdued, as they witnessed a decline of 4.43 percent and 7.04 percent, respectively. Other crops grew by 3.33 percent on the back of an increase in the production of fodder, vegetables and fruits.
Large Scale Manufacturing (LSM)
LSM also recorded a growth of 6.13 percent highest in ten years. Industrial sector growth improved by 5.80 percent is the 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.
The industry specific data shows that Electronics recorded highest growth of 38.79 percent , Iron & Steel products 30.85 percent , Automobile 19.58 percent on the back of significant growth in Tractors 44.68 percent, Trucks 24.41 percent, Jeeps and Cars 23.29 percent, LCVs 19.73 percent and motor cycles 14.15 percent.
The government remained successful in developing energy-related projects through indigenous energy resources such as coal, hydro and renewable sources.
Thirty five (39) projects with cumulative capacity of 12,230 MW have been added, Pakistan Economic Survey claims.
By February 2018, the installed capacity of electricity reached 29,573 MW which was 22,812 MW in FY 2012-13, thus, posting a growth of 30 percent.
Although electricity generation varies due to availability of inputs and other constraints, however, the generation increased from 96,496 GW/h in 2012-13 to 117,326 GW/h in FY 2016-17 posting a growth of 22 percent, while, during July-February FY 2018, electricity generation remained 69,956 GW/h, the Pakistan Economic Survey claimed.
The government will continue to diversify energy supply to meet energy needs in a sustainable and affordable manner. Since FY2014, the share of government in Fixed Investment (GFCF) has increased significantly especially in Electricity Generation and Distribution & Gas Distribution.
During current fiscal year FY 2018, CPI increased to 4.6 percent which was the highest since the start of current fiscal year FY 2018. In January 2018 it came down to 4.4 percent and in March 2018, it fell to an eight-month low at 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.
Public Expenditure on Education as a percentage of GDP was estimated at 2.2 percent in FY 2017 compared to 2.3 percent of GDP in FY 2016, the Economic Survey stated.
The education-related expenditure increased by 5.4 percent to Rs 699.2 billion in FY2017 from Rs 663.4 billion in FY2016.
The total number of enrolments at the national level during 2016-17 stood at 48.062 million as compared to 46.223 million during 2015-16. This shows a growth of 3.97 percent and it is estimated to further rise to 50.426 million in 2017-18.
The total number of institutes stood at 260.8 thousand during 2016-17 as compared to 252.8 thousand during last year and the number of institutes is estimated to increase to 267.7 thousand in 2017-18. The total numbers of teachers during 2016-17 were 1.726 million compared to 1.630 million during last year showing an increase of 5.9 percent. This number of teachers is estimated to rise further to 1.808 million in FY 2017-18.
The cumulative health expenditures of federal and the provinces are estimated at Rs 384.57 billion for FY 2017-18 which is 31.75 percent higher than the actual expenditures of Rs 291.90 billion realized during FY 2016-17.
A brief look into previous year’s performance reveals that total health expenditures increased both in terms of growth and as percentage of GDP. It grew by 29.54 percent to stand at Rs 291.90 billion during FY 2016-17 against Rs 225.87 billion in FY 2015-16.
Encouragingly, health expenditures surpassed the budget allocation of Rs 273.34 billion set for FY 2016-17. While in terms of GDP, health expenditure increased to 0.91 percent during FY 2016-17 from 0.77 recorded in FY 2015-16.
During July-February, 2017-18, health expenditures consumed 43.5 percent of budget allocation to reach Rs 167.16 billion against the expenditure of Rs 121.57 billion in the comparable period of last year.
By the year 2017, the number of public sector hospitals has increased to 1211, 5508 basic health units (BHUs), 676 rural health centers (RHCs) and 5,697 dispensaries. These facilities together with 20,8007 doctors, 20,463 dentists and 103,777 nurses bring the current ratio of one doctor to 957 persons, 9,730 person per dentist and availability of one hospital bed for 1,580 person that shows that number under each establishment is increasing.
Recent Developments in Public Debt
Total public debt provisionally stood at Rs 23,608 billion at end February 2018 while total debt of the government was Rs 21,552 billion. Gross domestic debt recorded an increase of Rs 1,093 billion during first eight months of current fiscal year while external debt increased by Rs 1,107 billion.
In addition to financing of fiscal deficit, (i) increase in credit balances of the government with banking system; (ii) depreciation of Pak Rupee against US Dollar; and (iii) depreciation of US Dollar against other international currencies contributed towards the increase in debt.
External debt and liabilities stock provisionally stood at US$ 91 billion at end February 2018 out of which external public debt was US$ 69.3 billion.
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 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.
The growth in exports earnings and remittances inflows was not sufficient to overcome the current account deficit gap. Hence, the SBP’s liquid foreign exchange reserves declined by US $ 4.5 billion during July-March FY2018.
The period from July – March FY 2018, the capital market operated in a wide range. During the period under review, the market remained volatile. Till August 2018, it reached the peak of 47,084 index on August 03, 2017, after then it started moving down touched the lowest 37,919 Index on December 19, 2017. The behavior might be linked to the depreciation of Pakistani rupee. However, at the start of new calendar year 2018, the market gained momentum and on March 30, 2018, KSE 100 index closed at 45,560.30 whereas market capitalization was Rs 9,370.6 billion. The average daily value traded (T+2) in first nine months of FY 2018 was Rs 8.54 billion and the average daily turnover was 192.25 million shares. The average daily trade value in futures was 3.7 billion and the trading volume was 61.4 million shares.
Social Safety Nets
Government of Pakistan 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 31st December 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.
Pakistan Poverty Alleviation Fund (PPAF) is also contributing a large number of funds throughout Pakistan to its core projects like microcredit, water and infrastructure, drought mitigation, education, health and emergency response interventions have been widely recognized.
The core operating units of the PPAF delivered a range of development interventions at the grassroots/community level through a network of its Partner Organizations (POs) in 130 districts across the country. During July to December, 2017, PPAF has disbursed Rs 780 million to its Partner Organizations (POs) under PPAF core interventions administered under various PPAF operational units, Pakistan Economic Survey added