Uzair bin Farid

Over the past five and a half years, Pakistan registered the highest growth in per capita gross domestic product (GDP) in the fiscal year 2021-22. According to the Asian Development Outlook, April 2023, released by the Asian Development Bank, Pakistan registered a growth of 5.4% in per capita GDP in the fiscal year 2021-22 compared to 3.7% in the fiscal year 2020-21.

The report said that the current level of per capita gross national income (GNI) of Pakistan stands at $1,470 in fiscal year 2020-21. The growth in per capita GDP was accompanied by a concomitant increase in agricultural value addition. In FY22 the growth rate of value-addition in the agriculture sector stood at 4.4% compared to 3.5% in FY21.

As for the growth rate of value addition in industry, it stood at 7.2% in FY22 compared to 7.8% in FY21. The growth rate in value addition in the services sector saw a marginal increase to 6.2% in FY22 from 6% in FY21. The central government revenue remained at a dismal low of 12% of GDP compared to the expenditure of almost 20% of GDP in FY22. The gap in revenue and expenditure was financed by more debts which saw the widening of fiscal deficit to -7.9% of GDP in FY22 from -6.1% in FY21.

One notable exception to the performance of different trends was the growth in merchandise exports in FY22. Rising from a low level of -7.1% in FY20 to 13.8% in FY21, the growth rate of merchandise exports reached a high level of 26.6% in FY22, showing a trend of increasing exports at the time. In addition to the economic indicators of growth and development, the report has ‘urgently’ called for adaptation to climate change.

The report stated that the Global Climate Risk Index has for the past 20 years ranked Pakistan in the top 10 most vulnerable countries to climate change risk. It said there exists a ‘clear gap’ between policy direction and implementation mechanisms to implement climate solutions. Given the supply shocks and post-flood recovery problems, Pakistan’s economy is expected to decelerate to 0.6% in FY23 after which it will recover to the growth level of 2% in FY24.

The report further said that in the last fiscal year i.e., FY22 it was the accommodative policies of the government that had supported the strong growth level of 6%. However, the report said, the central bank was very slow in moving to stop the increase in prices through the mechanism of policy rate. Throughout FY22, the real policy rate remained negative since inflation was always higher than the rate itself. The report concluded by saying that Pakistan faces many internal and external challenges which have increased the downside risk given the volatile situation of global markets and rapid evolution of new geopolitical realities.

Credit: Independent News Pakistan-WealthPk