Pakistan’s economy crossed the 5 percent growth rate for the first time during the decade. This number although welcoming is just a few basis short of the annual target set by sitting Government. However, the contribution to this growth is at best a holistic one which is saving grace for the country. With all three sectors contributing almost equally and without any direct or indirect help from the Government; services, manufacturing and agriculture witnessed healthy growth rates.
The Agricultural sector grew by 3.46% compared to 0.27% during the previous year. Within Agricultures sector, the biggest contribution has been from Cotton Ginning head which grew by 5.59% in comparison to the previous year's decline of 22.12%. The sector has been a backbone for the economy since times immemorial. Cotton crops have been the driving force behind textile sector which has been the largest contributor to Pakistan’s exports trade. Other heads in agriculture that contributed to the years’ growth were forestry which grew by 14.49% and livestock contributing 3.43%. The growth in agriculture sector has been the contributing factor in doubling of sales for Farm Tractors across the Agriculture Belt during the first ten months, as mentioned in the data issued by PAMA (Pakistan Automotive Manufacturers’ Association).
Industrial Sector grew by 5.02% despite falling short of the targets set by Government. Large Scale and Small Scale manufacturing each grew by 4.93% and 8.18%. The growth in small scale manufacturing is a welcome sign as it goes on to show that the local industry at small scale is contributing to the national economic output. Another head whose performance was remarkable during the current fiscal year was construction which grew by 9.05%. This growth was translated in the rising share prices and trading volumes in the cement, construction and steel sector in Pakistan’s benchmark index PSX. Although the growth was down compared to previous years’ 14.60% but this is a good sign as businesses are focusing to invest in other sectors to boost growth and trade.
Commodity Producing Sectors; agriculture and manufacturing cumulatively grew by 4.26% in the current fiscal year.
The strongest sector was services with tiers of Wholesale & Retail and financial services growing exponentially. The Retail boom is making its mark on the Pakistani economic landscape; with ultra luxury shopping malls continuing to rise across the major financial hubs of the country, market is witnessing Retail euphoria at the moment. The rise of financial institutions is a very strong indicator of Pakistan’s growing investments and financial abilities. The numbers have risen owing to the record high performance of stock market returns. Finance & Insurance and Wholesale & Retail each grew by 6.82% and 10.77%. The financial sector was the best performing sector after Forestry in terms of year-on-year growth as Pakistan saw an upsurge in the investments owing Government’s increasing spending. The PSX benchmark index outperformed most of the world’s economies, growing by 38%, finishing in the top ten performing markets in MSCI – EM.
Government services and other private services’ performance carried forward last years’ momentum, with each growing by 6.91% and 6.28%.
Pakistan’s GDP during the current financial year crossed the $300 billion mark, although official numbers after adjustments may vary, the economy is rising without any Government support per se.
Additionally, exports were dismal during the year. With cement sector underperforming and declines in textile exports; the fiscal deficit has widened beyond measures. Although, some experts believe this has been a result of imports of heavy machinery from China under the auspices of CPEC, claiming the Current Account deficit widening was inevitable. With a decrease in remittance, exports and increases in imports, Pakistan’s economy is on a cross roads. The deficit needs to be decreased by increasing exports without which it is only imminent that Pakistan faces a Foreign Reserves crisis in the coming fiscal year.