Pakistan’s Investment to GDP Ratio Soars to 15.1%

Pakistan’s investment-to-GDP ratio has increased from 14.6 percent of GDP in 2020-21 to 15.1 percent during the ongoing fiscal year.

The Security and Exchange Commission of Pakistan (SECP) has incorporated the highest number of companies in a calendar year by registering 5,764 companies, 48 percent higher than in 2020, according to official documents available with ProPakistani.

The increase in the investment-to-GDP ratio is mainly due to a hike in public investment, which inched up to 3.4 percent of GDP in 2021-22 from 3.0 percent last year, and private investment stagnated at 10percent of GDP despite a 20 percent increase in nominal terms. However, private investment contracted marginally by 0.5 percent in real terms, mainly due to a 25 percent fall in investment related to the electricity & gas distribution sector.

Private investment increased by 49 percent in real terms in the construction sector because of the incentive package given by the government. Public sector investment inched up to, while private sector investment share in GDP remained stationary at 10 percent level.

Credit offtake for fixed investment has increased by 135.7 percent, while credit for working capital and trade finance has posted a growth of 448 percent during July-March 2021-22. Startup activities in the country attracted an unprecedented $350 million in investment from the global markets during CY21, which reflects the seizing of potential investment opportunities for the growing business enterprises.

The SECP has incorporated the highest number of companies in a calendar year by registering 5764 companies, 48 percent higher than in 2020.

As per the documents, the National Savings are expected to decline to 11.1 percent of GDP in 2021-22 from 14.1 percent in 2020-21. Pakistan’s reliance on external borrowing increased as national savings were not financing investment needs. The level of foreign savings is estimated to increase from 0.5 percent in FY21 to 4.1 percent of GDP in 2021-22.

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