Investments to grow by 15.8% of GDP in FY2020

June 25, 2019: The investment to GDP ratio has been targeted by the government to grow at 15.8 percent during the upcoming fiscal year 2019-20 in order to achieve sustained and inclusive growth.

Among the total investments, the fixed investment is expected to grow to 14.2 percent of GDP during the year while the National Savings as percentage of GDP are targeted at 12.8 percent, official data revealed.

The focus is to replace consumption led growth by investment led growth, it said adding that monetary policy contraction was aimed to contain the twin deficits by curtailing the aggregate demand with smoothen consumption as the high interest rate would create incentives for savings and enhance resource availability for growth.

Numerous measures to improve ease of doing business, such as tax holiday to special economic zones, withdrawal on constricting taxes on banking transactions, are expected to boost capital formation and attract both domestic and foreign investment.

Meanwhile, the service sector is set to grow at 4.8 percent in 2019-20, whereas the wholesale and retail trade along with transport, storage and communication, two biggest sub-sectors of the services, are set to grow at 3.9 and 3.5 percent respectively.

Finance and Insurance has potential to grow in 2019-20 by 6.5 percent while the general government services, other private services, and housing services are expected to grow at 5.7 percent, 7.1 percent and 4 percent respectively.

Likewise, the industrial sector is targeted to grow by 2.3 percent during 2019-20 while manufacturing sector is targeted to grow by 2.5 percent with Large-Scale Manufacturing (LSM) growth rate of 1.3 percent, Small Scale and Household Manufacturing 8.2 percent, Construction and Electricity Generation and Gas Distribution by 1.5 percent each. Mining and Quarrying sector is projected to grow by 2.0 percent.

Industry is expected to pick up pace in 2019-20 with the implementation of envisaged policy measures.

The private sector investment in industrial sector is expected to rise in 2019-20, which would be encouraged to take lead in spurring economic activity while public sector provides the necessary policy and regulatory support.

Similarly, construction in housing sector as envisaged in the government’s housing scheme and allied infrastructure projects are expected to reinvigorate production in cement, iron and steel.

Overall, it is expected that improved business conditions and consistent policies would contribute towards achieving the target of industrial sector growth for 2019-20.

APP/AFP