September 05, 2022 (MLN): In the wake of unprecedented floods which have resulted in in a loss of nearly $9.3 billion, the government of Pakistan has revised the GDP target to 2.3% against the IMF forecast of 3.5%.
The latest document issued by the Ministry of Finance showed that the growth of the agriculture sector is expected to decelerate by 0.7% from the Annual plan of 3.9% as the sector has suffered serious damages and the major cash crops have been destroyed.
Meanwhile, the growth of the industrial sector growth will likely come down by 1.9% from the annual plan of 5.9%. Similarly, the post-flood growth of services is expected to be 3.5% against the target of 5.1%.
Amidst this depressing episode, the supply chain has been badly disrupted which has already spiked inflation to 27.26%- highest since 1975 in August 2022, and with supply glitches and communication failures inflationary pressure will further aggravate.
Last week, the federal government exempted the sales tax on the import of onion and tomatoes till December 31, 2022, in an attempt to address the issue of food shortage due to catastrophic floods.
This decision will help stabilize the already skyrocketing prices of onions and tomatoes in the domestic market in these tough times.
It is pertinent to mention that the losses are far greater in magnitude than the received tranche of $1.16bn from IMF.
In order to overcome the huge losses, the country’s liquidity position needs to be strengthened.
