LAHORE: In the Global Economic Prospects published in January 2018, World Bank recommended that Pakistan should aim for a 7 per cent growth rate in line with other countries in the region, especially India and Bangladesh which are forecasted to grow at 7.5 per cent and 6.7 per cent in FY19 respectively.
The World Bank noted that Pakistan should be aiming at a GDP growth of plus 7 per cent, especially considering the huge opportunities created by CPEC investments and continuing improvements in law and order and energy sectors.
In line with World Bank’s estimates, Pakistan has continued to record improvement in economic growth, as the GDP is estimated to have grown by 5.79 per cent in the current fiscal year, which is highest in the last thirteen years. Nevertheless, it is still shy of the planned 6 per cent growth rate proposed by the government earlier. Yet the economy has steadily witnessed an upward trend from around 5.3 per cent growth achieved in 2016-2017.
The economic review along with the budget announced last week noted that this pace of real GDP growth has been backed by the robust growth in agriculture, manufacturing as well as the service sector.
Moreover, “The growth across different sectors of the economy is captivating various international companies towards Pakistan optimistically, where they see immense potential, a huge consumer market, strategic location and macroeconomic stable environment,” read a post-budget report released by Deloitte.
The report highlighted that consistent with last five years trend, the service sector has demonstrated a growth of 6.4 per cent and remained the key contributor to GDP growth. This growth was supported by the non-commodity producing sectors including wholesale and retail trade. The industrial and agricultural sectors also reflected a healthy growth of 5.8 per cent and 3.8 per cent respectively. Meanwhile, the agriculture sector surpassed its targeted growth of 3.5 per cent and also last year’s growth of 2.07 per cent.
Deloitte also noted in its report that the level of private consumption and investments largely contributed to the enhancement of the GDP growth. In this year, household’s average tendency to consume continued around the same level at 85.5 per cent at constant prices and at around 82 per cent in current prices. It reveals that the growth rate of private consumption was about the same as the growth rate of GDP both in constant and in the current price.
Moreover, low-interest rates also aided the consumption pattern of the economy, as people showed more interested in purchasing durables in the presence of cheap financing.
However, the 5.79 per cent real GDP growth was attributed to a number of factors ranging from the stable macroeconomic environment including improvement in the supply of electricity to the industrial sector.
It is pertinent to mention that for FY19 the government has announced a target growth rate of 6.2 per cent yet it continues to blame political crisis in the country for missing 6 per cent target last year.