Investment likely to grow by 17% of GDP

ISLAMABAD: The investments are targeted to grow at 17.2 percent of the Gross Domestic Product (GDP) during the fiscal year 2018-19 compared to the investments of 16.1 percent during last year.

The fixed investment during the year under review is expected to grow by 15.6 percent of GDP, according to official data, which added that the National Savings, as a percentage of GDP is targeted at 13.1 percent.
“The investment target is achievable given the improvement in ease of doing business, affordable energy supply, and prospects of higher profits and enhanced capacity utilization rate,” official sources said.
The spillover effect from public investment under China Pakistan Economic Corridor (CPEC) is expected to catalyze private sector and foster public-private partnership.
The expected technology and innovation spillover from the interaction of Chinese and Pakistani business would improve productivity in all sectors.
Further, the lagged impact of current investments, including CPEC investments by government, private local and foreign investors coupled with prudent monetary and fiscal policy is expected to bolster the economy.
During the last fiscal year (2017-18), total investment was recorded at 16.4 percent of GDP compared to 16.1 percent in 2016-17.
Fixed investment to GDP ratio grew from 14.5 percent in 2016-17 to 14.8 percent in 2017-18 on the back of increased public investment.
The private investment registered growth of 9.8 percent in 2017-18, the sources said adding notwithstanding inflationary expectations, the government shifted borrowing from scheduled banks to State Bank to create space for credit to private sector.
National Savings grew at 11.5 percent of GDP compared to 12 percent during 2016-17. Increased consumption led to the sub-par growth of savings, given the inverse relationship between the two.
Though commodity producing sectors have shown steady growth over the past three years, there is room for increased investment in these sectors for sustained growth.
In order for the investment to reach a level which accelerates growth beyond 6 percent, domestic savings need to grow at a faster pace.
However, growth in savings lagged behind the required level. The lack of national savings led to increased reliance on external resources for investment, transpiring an increase in current account deficit.
Infrastructure, construction and allied sectors remained vibrant in 2017-18, and encouraged investment in the country and fostered conducive environment for growth.


Please enter your comment!
Please enter your name here