Pakistan’s GDP grew at underwhelming 2.52pc last fiscal

ISLAMABAD: Pakistan’s GDP growth figure has slightly witnessed an upward revision (0.14 percent) in revised figures of the last fiscal year and stood at 2.52 percent against earlier provisional growth rate figures of 2.38 percent for 2023-24.

The fiscal year for 2023-24 ended on June 30, 2024, have now firmed up the real GDP growth rate figure whereby the growth rate rebounded in the last and fourth quarter (April-June) period so it jacked up the overall GDP growth rate from 2.38 percent to 2.52 percent backed by improved wheat production and large scale manufacturing.

Now the upward revision in the GDP growth rate might prove it hard for the government to achieve GDP growth rate of 3.5 percent envisaged for the current fiscal year keeping in view higher base for the last fiscal year and 64 percent decline in arrival of cotton estimates for the current fiscal year.

According to official announcement made by Pakistan Bureau of Statistics (PBS) on Monday that the National Accounts Committee (NAC) approves Q4 and updated annual estimates for FY 2023-24.

Due to revisions in annual benchmarks, quarterly growth rates for Q1, Q2 and Q3 during FY 2023-24 have changed to 2.69%, 1.97% and 2.36% from 2.71%, 1.79% and 2.09% presented in 109th meeting of the NAC respectively. The GDP for Q4 in FY 2023-24 has shown a growth of 3.07%.

The updated provisional and revised growth rates for FY 2023-24 and FY 2022-23 are 2.52% and -0.22% against 2.38% and -0.21% approved in previous NAC meeting respectively.

The 110th meeting of the NAC was held under secretary, Planning and the committee approved the revised quarterly GDP growth rates for Q1, Q2, Q3 and fresh estimates of Q4 during FY 2023-24 and updated annual growth rates for 2022-23 (Revised) and 2023-24 (Provisional).

The committee approved the revised first, second and third quarter estimates of 2023-24. Overall GDP for Q1, Q2 and Q3 for FY 2023-24 has witnessed a revised growth of 2.69%, 1.97% and 2.36% as compared to 2.71%, 1.79% and 2.09% presented in 109th meeting of the NAC respectively.

While the revised growth rates in agriculture during Q1 (8.64% vs. 8.59%) and Q2 (6.12% vs. 5.83%) have improved, the growth in Q3 has slighted declined from 3.94% to 3.92%. The industrial activities have posted downward revisions in all three quarters i.e. from -2.44% to -2.66% in Q1, from 0.09% to -1.15% in Q2, and from 3.84% to 2.83% in Q3 mainly due to downward revisions in annual benchmarks of electricity, gas, water supply, and construction industries.

While the Q1 growth in services has remained stable at 2.03% vs. 2.02%, both Q2 (from 0.75% to 1.33%) and Q3 (from 0.83% to 1.60%) have witnessed upward revisions due to improvements in annual benchmarks in wholesale & retail trade (WRT), transportation & storage, and information & communication industries.

3. The economy has posted a stable growth of 3.07% during Q4 of FY 2023-24. The growth in agriculture, industry and services stands at 6.76%, -3.59% and 3.69% respectively. During Q4, crops have posted a double-digit growth of 14.03%. The growth in important crops stands at 26.98% mainly due to wheat (31.58 M.T) and partly due to low base effect of corresponding quarter i.e. -7.93% during Q4 of FY 2022-23. Due to decline in fruits, Q4 growth in other crops is negative i.e. -1.53% as compared to -0.64% in last year. While livestock has grown at 3.98% vs. 4.31% in Q4, a high-base effect of 15.12% has resulted into negative growth of 0.35% in forestry. Despite a positive growth in large-scale manufacturing (4.19% vs. -19.5%), the remaining components of the industry i.e. mining & quarrying (-5.32% vs. 1.22%), electricity, gas and water supply (-35.57% vs. 9.15%) and construction (-0.47% vs. -20.46%) have registered negative growth rates during Q4. Although growth rates in finance and insurance (-2.55%) and public administration and social security (-0.18%) are negative, the overall growth in services is positive (3.69%) during Q4 2023-24 due to wholesale & retail trade (4.79%), transportation & storage (2.11%), information and communication (7.95%), Page 2 of 3 education (9.04%), human health & social work activities (5.86%) and other private services (3.38%).

4. The committee also approved the updated revised growth during FY 2022-23 at -0.22%, which was estimated at -0.21% in the previous meeting. In the updated estimates, agriculture has slightly declined from 2.27% to 2.21%, the industry (-3.70% vs. -3.74%) and services (-0.02% vs. -0.01%) have remained stable. Further, the committee also approved the updated provisional growth of GDP at 2.52% during FY 2023-24 based on improved data from the sources as compared to 2.38% estimated in the previous meeting.

The updated growth rates in agriculture, industry and services are 6.36%, -1.15% and 2.15% respectively. The healthy growth of agriculture is mainly due to double-digit growth in important crops i.e. 17.02%, which was 16.82% in previous meeting on account of improvement in wheat (from 31.438 to 31.583 MT). While the growth in other crops has declined from 0.90% to -1.20%, the livestock has improved from 3.89% to 4.47% due to decrease in inputs.

6. In the updated estimates for 2023-24, industry has declined by -1.15% against 1.21% presented in the previous meeting. There is a downward revision in mining & quarrying from 4.85% to 3.47% because of decrease in gas (-2.22%) and coal (-2.10%). Large scale manufacturing, which is based on Quantum Index of Manufacturing (QIM), has improved to 0.91% (July-June QIM) from 0.07% (July-March QIM) due to increase in Food (from +1.69% to +1.73%), Wearing Apparel (from +5.41% to +8.24%), and Coke & Petroleum (from +4.85% to +9.81%). The decline in electricity, gas and water supply industry has accelerated by -23.05% vs. -10.55% because of decrease in output of Wapda and Companies, KE and Gas (SNGPL).

In the updated estimates, construction industry has declined by -1.47% as compared to 5.86% estimated in the previous meeting due to increase in construction- related expenditures in the public sector.

The updated growth in services is 2.15% as compared to 1.21% estimated in previous estimates. There are major positive changes in WRT (3.39% vs. 0.32% due to increase in LSM & imports, Transport & Storage (1.91% vs. 1.19% due to railways, KPT, PIA & CAA, Information & Communication (0.30% vs. -3.02% due to IT exports.

However, growth in some industries has declined e.g. Finance & Insurance (-10.67% vs. 9.64%), Public Administration and Social Security (-7.26% vs. -5.25%), Education (8.55% vs.10.30%) and Human Health and Social Work (5.55% and 6.80%). Other private services remained stable at 3.61% vs. 3.58% in previous estimates. The committee also approved the introduction of quarterly estimates of net taxes, GDP, net primary income, and gross national income (GNI) in the National Statistical System of Pakistan, thereby paving the way for the quarterization of the expenditure side of the economy.

Overall the forum appreciated the efforts of National Accounts team of PBS and key stakeholders including Ministry of Planning Development and Special Initiatives, Ministry of Finance and State Bank of Pakistan in preparation of quarterly GDP.