Pakistan’s GDP grows at 0.92% in first quarter

ISLAMABAD: Pakistan’s GDP growth is slower and stood at 0.92 per cent during the first quarter of the current fiscal year, clearly demonstrating that the economy has turned into halt mode after achieving stabilisation under the IMF programme.

This GDP growth figure of less than 1pc is much lower than the population growth of 2.55pc, witnessed in the last population census, which means it will remain insufficient to dent poverty and unemployment in the country.

On the basis of the latest figures of national accounts aggregates for FY2023-24, the overall size of the economy stands at Rs105.6 trillion i.e. $373.3 billion. Further, per capita income in rupees is 472,263 i.e. $1669.

However, the series of per capita income from 2016-17 onwards will be revised after the receipt of backward and forward projections of population from sources on the basis of 2023 population census.

In order to implement the condition of IMF programme of $7 billion, the government released quarterly GDP growth figures for the first quarter (July-September) period of Financial Year 2024-25. The industrial growth remained negative, while agriculture and services sectors posted positive growth. However, the GDP growth figures for the last fiscal year 2023-24 was slightly revised downward from 2.52pc to 2.5pc.

Independent economists say this GDP growth reflected ground realities as although the IMF programme stabilised the economy, the economy was halted.

According to an official announcement made by Pakistan Bureau of Statistics (PBS) on Monday, the National Accounts Committee (NAC) approved Q1 growth for FY2024-25 and updated annual estimates for FY2023-24.

Despite contraction in industry (-1.03pc), economy posted a growth of 0.92pc during FY2024-25Q1 due to positive growth in agriculture (1.15pc) and services (1.43pc). Annual updated growth rate of GDP during FY2023-24 stands at 2.50pc as compared to 2.52pc approved in the previous NAC meeting.

The NAC approved methodology and quarterly estimates of expenditure side of the economy from 2015-16Q1 to 2023-24Q4. The 111th meeting of the NAC was held under chairmanship of the secretary, Ministry of Planning, in which approval was given for the updated annual growth rates for FY2022-23 and FY2023-24 (revised) and Q1 growth rate of GDP during FY2024-25.

The economy posted a growth of 0.92pc during Q1 of FY2024-25. The growth in agriculture, industry and services stands at 1.15pc, -1.03pc and 1.43pc, respectively.

During Q1, crops contracted by 5.93pc. The contraction of 11.19pc in important crops is due to reduction in the production of cotton (-29.6pc), maize (-15.6pc), rice (-1.2pc), and sugarcane (- 2.2pc). The wheat crop has no impact in Q1 as it is neither sown nor harvested during this quarter.

Other crops have grown by 2.08pc as compared to -2.08pc in Q1 last year due to decline in inputs e.g. fertiliser and pesticides. Livestock has increased by 4.89pc as compared to 4.56pc in Q1 last year because of increase in livestock products and decrease in inputs (dry fodder). Forestry and Fishing industries have witnessed a modest growth of 0.78pc and 0.82pc, respectively.

The rate of contraction in industry slowed down from 4.43pc in 2023-24Q1 to 1.03pc in 2024-25Q1. Mining and quarrying industry contracted by 6.49pc due to low quarterly production of mining products e.g. coal (-12.4pc), gas (-6.7pc) and crude oil (-19.8pc) provided by the sources. While, the LSM [Large Scale manufacturing], driven by QIM, has declined by 0.82pc, electricity, gas and water supply industry posted a modest growth of 0.58pc. The construction industry, estimated on the basis of production of construction inputs, declined by 14.91pc mainly due to reduction in production of cement (-16.12pc) like key input.

The services have grown by 1.43pc as compared to 2.16pc in Q1 last year due to positive contribution to wholesale and retail trade (0.51pc), accommodation and food services (4.58pc), information and communication (5.09pc), real estate activities (4.22pc), education (2.03pc), human health and social work activities (5.60pc) and other private services (3.30pc). However, transportation and storage and public administration and social security industries contracted by 0.07pc and 4.49pc, respectively.

The committee also approved introduction of quarterly estimates of expenditure side of the economy in addition to net taxes, GDP, net primary income, and gross national income (GNI), which were incorporated in the National Statistical System of Pakistan after the September 2024 meeting. The committee approved the updated growth of GDP during FY 2023-24 at 2.50pc as compared to 2.52pc estimated previously.

Despite an improvement in important crops from 17.02pc to 17.12pc, the updated growth in agriculture has slightly moved down to 6.18pc from 6.36pc mainly due to downward revision in Forestry from 3.05pc to -0.89pc chiefly as result of lower production of timber. The rate of contraction in industry moved up from 1.15pc to 1.65pc. The mining and quarrying industry witnessed a major change from 3.47pc to -4.16pc due to decline in production of coal (-5.21pc) and limestone (-25.8pc) in KP and Balochistan provinces. Improvement in transport (from 1.91pc to 2.12pc), information and communication (from 0.30pc to 3.45pc), education (from 8.55pc to 9.05pc) and health (from 5.55pc to 5.99pc) improved services from 2.15pc to 2.35pc.