Ayesha Mudassar

Increasing risks, including global economic slowdown and flood damage at home, coupled with the central bank’s restrictive policies have dampened Pakistan’s economic growth. As per the Economic Survey 2022-23, the real GDP posted a growth of just 0.29% for the outgoing fiscal year, missing the target of 5% by a bigger margin. These factors have created headwinds for all sectors of the economy – agriculture, industry and services.

Agriculture

Agriculture – the backbone of Pakistan’s rural economy – is experiencing slow growth. According to the survey, the growth of the agriculture sector was estimated at 1.55% in FY23, mainly driven by some main crops, including wheat, sugarcane and maize. Wheat production was recorded at 27.63 million tonnes compared to 26.21 million tonnes last year, showing an increase of 5.4%. Similarly, sugarcane yield increased by 2.8%, and maize grew by 6.9%.

The livestock sector, which constitutes almost 62% of agriculture, posted a growth of 3.78%. The other components – forestry and fishing – posted growth of 3.93% and 1.44%, respectively. However, the cotton crop witnessed a decline of 41% from 8.33 to 4.91 million bales, and rice production also reduced by 21.5% from 9.32 to 7.32 million tonnes. Talking to WealthPK, Mohammad Azeem Tariq, Principal Scientific Officer at the National Agriculture Research Centre, Islamabad, said the sector had been hit hard as a result of August 2022 floods, heightened inflation, and high electricity tariff.

Industry

The industrial sector posted a negative growth of 2.94% in FY23. Large Scale Manufacturing (LSM) – a key indicator of industrial activity – witnessed a decline of 8.11% during the July-March period of FY23 compared to a growth of 10.61% over the corresponding period last year. The main contributors to the overall negative growth of 8.11% were textile (-3.16), garments (-2.94), automobiles (-1.85), pharmaceuticals (-1.30), food (-1.62), tobacco (-0.57), cement (-0.85), and petroleum products (-0.68). Kashif Anwar, President of Lahore Chambers of Commerce and Industry (LCCI), said rising interest rates, soaring inflation, and massive currency devaluation were making industries less competitive. Furthermore, the decision to restrict the import of inputs to save dollars has also adversely affected the sector’s output.

On a year-on-year basis, the growth of LSM contracted by 24.99% in March 2023 against 26.29% in the same month last year. While, on a month-on-month basis, the growth of LSM declined by 9.09% in March 2023 compared to an increase of 0.06% in February 2023.

Services

The services sector, which constitutes the largest share of 58% of GDP, witnessed meagre growth of 0.86% during the period under review. As per the economic survey, the wholesale and retail trade industry declined by 4.46%. The finance and insurance industry showed an overall decrease of 3.82%. Moreover, public administration and social security activities posted a negative growth of 7.76%. On the contrary, the second largest services sector – transportation and storage – increased by 4.73%. Accommodation and food services activities grew by 4.11%. Information and communication increased by 6.93%. Education witnessed a growth of 10.44% due to public sector expenditure. Human health and social work activities also grew by 8.49%.

Credit : Independent News Pakistan-WealthPk