Economy suffers major setback in FY19, growth rate slows to 3.3pc

[Rinnegan Sasuke]

ISLAMABAD: Pakistan’s economy suffered a major setback with all key sectors failing to perform according to expectations resulting in just 3.3 per cent economic growth rate, significantly short of 6.2pc growth target for the year 2018-19.

“Growth of agricultural, industrial and services sectors is 0.85pc, 1.4pc and 4.7pc respectively,” said an official announcement on Thursday, painting a dismal performance of the overall economy in the first year of Pakistan Tehreek-i-Insaf government. “The provisional growth of GDP for the year 2018-19 has been estimated at 3.3 pc”.

The government has anticipated 3.8pc in agriculture, 7.6pc in industry and 6.5pc in services, thus target of 6.2pc GDP growth. All these targets fell flat.

These figures were framed in the 101st meeting of the National Accounts Committee — chaired by Secretary Planning, Development and Reform Zafar Hasan — to review the Gross Domestic Product (GDP). Provisional estimates for the year 2018-19 for GDP and Gross Fixed Capital Formation (GFCF) have been presented on the basis of the latest data available for six to nine months.

As per the available data, the crop sector faced the consequences of acute water shortages during the first half of the 2018 and thus only wheat depicted positive growth of 0.5pc and cotton, rice and sugarcane witnessed negative growth at -17.5pc, -3.3pc, and -19.4pc, respectively.

Other crops (such as onion, tomatoes and fruits) showed growth of 1.95pc mainly because of increase in production of pulses and oil seeds. Livestock sector registered a growth of 4pc whereas forestry has grown at 6.5pc due to increase in production of timber.

Agriculture sector is targeted to grow by 3.8 percent on the basis of expected contributions of Important Crops (3pc), other crops(3.5pc), cotton ginned (8.9pc), livestock (3.8 pc), fisheries (1.8 pc) and forestry (8.5 pc). All these targets were missed except the one related to livestock.

The overall industrial sector on the other hand showed an increase of 1.4pc. The mining and quarrying sector declined by 1.96pc. The large scale manufacturing (LSM) sector, which is driven primarily by QIM data (from July 2018 to February 2019), showed a contraction of 2.1pc.

Electricity and gas sub-sector has grown by 40.5pc mainly due to better performance of Wapda and distribution companies and IPPs. The construction activity has decreased by 7.6pc.

Industrial sector is targeted to grow by 7.6pc during 2018-19. Manufacturing sector is targeted to grow by 7.8pc with LSM growth rate of 8.1pc, small scale and household manufacturing 8.2pc, construction 10pc and electricity generation and distribution and gas distribution by 7.5pc.

Services sector remained major contributor to economic growth as its value added increased by 4.7pc. Within services sector, wholesale and retail trade sector grew by 3.1pc whereas transport, storage and communication sector has registered a growth of 3.3pc.

Finance and insurance sector shows an overall increase of 5.1pc on account of positive contributions from scheduled banks (5.3pc), non-schedule banks (24.6pc) and insurance activities (12.8pc) despite decline in central banking by 12.5pc. General government services has grown by 7.99pc and other private services, a set of computer related activities, education, health and social work, NGOs etc. has contributed positively at 7.1pc.

https://www.dawn.com/news/1481373/economy-suffers-major-setback-in-fy19-growth-rate-slows-to-33pc

 

[Sher Khan]

Mashallah, well done PTI. Bear in mind, that the IMF loan is yet to come into effect and of course the CPEC loan repayments are due. So from next year onwards the situation will be a lot worse. Dark days ahead for Pakistan, I’m afraid.

 

[Bewal Express]

Mashallah, well done PTI. Bear in mind, that the IMF loan is yet to come into effect and of course the CPEC loan repayments are due. So from next year onwards the situation will be a lot worse. Dark days ahead for Pakistan, I’m afraid.

And why are we in this terrible position? I want to hear your explanation and please dont run!

 

[Sher Khan]

And why are we in this terrible position? I want to hear your explanation and please dont run!

Look brother, Their is a difference between being competent and being incompetent. Forget about Nawaz and Panamagate. The truth is Nawaz had quite a lot of output every time he became PM. He knew how to get things done. The security situation improved under him, transport services were renovated and are running better than before. Load shedding decreased during his rule, the economy became really strong before Imran started the azadi marches. Those marches had a negative impact on Pakistan’s economy.

On the other hand, Imran has plunged the country into darkness. They have completely halted our economic growth. Not only that many other sectors are showing no progress at all.

 

[SensiblePakFan]

Meh, its only been a year.

 

[Angrez Pakistani]

Growth rate is not exactly the best way judge an economy. I'd love to see the wage percentage in national income. Has it increased or decreased from previous year?

 

[Pete Rose]

When you devalue your currency you are already starting with the negative. This slowdown is expected and forecast by the IMF.. The only silver lining here is that it has come in higher than forecast by the IMF.
It might still be lowered further. I am more interested in seeing what our current account deficit will be. Not as % of GDP but as actual.

 

[Syed1]

When you devalue your currency you are already starting with the negative. This slowdown is expected and forecast by the IMF.. The only silver lining here is that it has come in higher than forecast by the IMF.
It might still be lowered further. I am more interested in seeing what our current account deficit will be. Not as % of GDP but as actual.

CAD has been almost halved.... from $19b to estimated $12b. These days every Tom, Dick or Harry who doesn't know the ABC of economics has become an economic expert just look at some of the posts on this thread.

 

[Slim]

I cannot even buy a new phone. The same that costed 75,000 last year costs 1 Lakh 6 thousand. My salary nominally has stayed the same but in real figures it has been slashed by 40% after PTI govt's devaluation.

 

[Markhor]

The devaluation was necessary - it was being artificially propped up by the previous government who burned through the foreign exchange reserves.

That is not a sustainable way to run an economy. Some bitter medicine will be needed to restore a sound fiscal footing.

 

[Bewal Express]

Look brother, Their is a difference between being competent and being incompetent. Forget about Nawaz and Panamagate. The truth is Nawaz had quite a lot of output every time he became PM. He knew how to get things done. The security situation improved under him, transport services were renovated and are running better than before. Load shedding decreased during his rule, the economy became really strong before Imran started the azadi marches. Those marches had a negative impact on Pakistan’s economy.

On the other hand, Imran has plunged the country into darkness. They have completely halted our economic growth. Not only that many other sectors are showing no progress at all.

NS had no idea what he was doing bar stealing. It was during his reign that we borrowed $37bn of which some was stolen, and other used to artificially prop up the rupee. The budget deficit was nearly 7% when he left, the current account deficit was over $30bn. In those 3 stats you will get your answer as to what IK had to face. The crisis was predicted for the last 3 years, why were people predicting the economic storm if things were so good. Your terrible understanding of economics betrays a simple mind which does not understand cause and effect.

 

[Pete Rose]

I cannot even buy a new phone. The same that costed 75,000 last year costs 1 Lakh 6 thousand. My salary nominally has stayed the same but in real figures it has been slashed by 40% after PTI govt's devaluation.

A mobile is a luxury not a necessity. you can
- buy a cheaper phone
- pay more for the phone you want
- travel outside and buy one and bring it back in to the country
- you can also choose to vote this party out of power, if your big issue is buying your choice of mobile phone

 

[Pete Rose]

The devaluation was necessary - it was being artificially propped up by the previous government who burned through the foreign exchange reserves.

That is not a sustainable way to run an economy. Some bitter medicine will be needed to restore a sound fiscal footing.

This is an example of how PTI gets its messaging wrong. They should be focusing on their efforts to bring the CAD down and highlighting the good news here.
The PML is basically going to talk about their unsustainable GDP growth model with fake inflation levels, till the next election.

 

[Bewal Express]

I cannot even buy a new phone. The same that costed 75,000 last year costs 1 Lakh 6 thousand. My salary nominally has stayed the same but in real figures it has been slashed by 40% after PTI govt's devaluation.

The exchange rate was artificially keeping the priced low. PK exports $23 and Imports were around $55bn and it doesn't take a genius to work out that BOP crisis was around the corner and quite simply we runout of Foreign Exchange. Unfortunately the bitter pill side effects will take time to clear and that is also hoping that Iran and America don't kick off.

 

[cricketjoshila]

Is the CAD down due to increased exports or decreased imports?

If its due to decreased imports, is it due to decreased energy imports? If yes then does it mean that Pakistan is using less energy resources? Why has energy consumption gone down? Are industries closing down and using less electricity or is their better use of the resources.

If import is down on luxury goods,is it due to increased duty or lesser sales as people cannot buy.

Only saying CAD is down doesnot make much sense.

 

[Pete Rose]

Is the CAD down due to increased exports or decreased imports?

If its due to decreased imports, is it due to decreased energy imports? If yes then does it mean that Pakistan is using less energy resources? Why has energy consumption gone down? Are industries closing down and using less electricity or is their better use of the resources.

If import is down on luxury goods,is it due to increased duty or lesser sales as people cannot buy.

Only saying CAD is down doesnot make much sense.

Need to get the underlying data, but the moves were driven with the objective of getting the non-essential imports down.

 

[Slim]

A mobile is a luxury not a necessity. you can
- buy a cheaper phone
- pay more for the phone you want
- travel outside and buy one and bring it back in to the country
- you can also choose to vote this party out of power, if your big issue is buying your choice of mobile phone

You are missing the real point which was in my last sentence. My salary in real figures has been slashed by 40% because of currency devaluation. Thats horrendous by all accounts. And yes, i will vote them out if it continues to worsen by the end of their tenure.

 

[Pete Rose]

You are missing the real point which was in my last sentence. My salary in real figures has been slashed by 40% because of currency devaluation. Thats horrendous by all accounts. And yes, i will vote them out if it continues to worsen by the end of their tenure.

You need to take that up with your employer.

 

[Slim]

You need to take that up with your employer.

Are you for real?

What has my employer to do with currency devaluation? Did your employer adjust for currency devaluation?

 

[Slim]

The exchange rate was artificially keeping the priced low. PK exports $23 and Imports were around $55bn and it doesn't take a genius to work out that BOP crisis was around the corner and quite simply we runout of Foreign Exchange. Unfortunately the bitter pill side effects will take time to clear and that is also hoping that Iran and America don't kick off.

I really hope that the $ rate gets better in future, because currently the devaluation has destroyed the purchasing power of Pakistani consumer.

 

[WebGuru]

I really hope that the $ rate gets better in future, because currently the devaluation has destroyed the purchasing power of Pakistani consumer.

Ishaq Dar burned $7 billion to keep rupee overvalued and we didn't just lose 7 billion but also lost exporters because dollar was devalued if you have noticed exports are rising again after the devalue of rupee so it's always going to hurt someone first it was hurting exporters and out total exports now it's hurting consumer and imports

 

[Bewal Express]

I really hope that the $ rate gets better in future, because currently the devaluation has destroyed the purchasing power of Pakistani consumer.

True,and devaluation is never great but we import 30bn more than we export, and just basic supply and demand tells you that our rupee isn't in demand and hence the devaluation.