Government unveils economic survey detailing the country’s economic performance, with GDP growth missing expectations amid challenges

Pakistan’s economic landscape for the financial year 2023-24 fell short of expectations as the government disclosed a GDP growth of 2.38%, failing to meet the targeted 3.5%. Finance Minister Muhammad Aurangzeb presented the Economic Survey of Pakistan 2023-24, outlining the nation’s socio-economic progress during the past fiscal year.

Despite challenges, including fiscal constraints, prudent policy management led to a positive turnaround, shifting from negative growth in FY 2023 to a modest increase in FY 2024. However, the growth trajectory remained below the anticipated target, primarily attributed to underperformance in industries and services sectors.

Agriculture emerged as a notable performer, exceeding expectations with a growth rate of 6.25%, contrasting sharply with the industrial and services sectors, which lagged behind with growth rates of 1.21% each, missing their respective targets of 3.4% and 3.6%.

Finance Minister Aurangzeb emphasized the significant role of the agricultural sector, citing it as the primary driver of economic growth for FY 2024, marking the highest growth in 19 years.

The survey revealed a fiscal deficit of 3.7%, consistent with the previous year, while the trade deficit stood at 4.2%. Revenue collection totalled 9.79 trillion from July to March, comprising tax revenues of Rs 7.26 trillion and non-tax revenues of 2.52 trillion.

Inflation showed signs of moderation, decreasing to 11.8% throughout FY 2024, reflecting a gradual alleviation of prolonged inflationary pressures since the third quarter. The GDP at current market prices surged to Rs.106,045 billion, registering a substantial growth of 26.4% compared to the previous year.

Per capita income witnessed a rise to USD 1,680, attributed to increased economic activity and exchange rate appreciation, marking a significant increase from USD 1,551 recorded in the previous year.

However, macroeconomic policies, coupled with political uncertainty, contributed to a decline in the investment to GDP ratio, falling to 13.14% in FY 2024 from 14.13% in FY 2023. Similarly, the saving to GDP ratio decreased marginally to 13.0% in FY 2024 compared to 13.2% in FY 2023.

Addressing challenges in state-owned enterprises, the government reiterated its commitment to privatizing loss-making entities, with plans to privatize Pakistan International Airlines, the national flag carrier.

The unveiling of the Economic Survey precedes the national budget announcement scheduled for June 12 (Wednesday), highlighting key insights into Pakistan’s economic performance and future outlook.

Analysis:

Political Perspective: The government’s acknowledgement of missed GDP targets underscores the political challenges in managing economic growth amidst fiscal constraints and sectoral underperformance. The need for coordinated policy responses and structural reforms remains critical to address economic vulnerabilities and sustain long-term growth.

Social Impact: The economic survey findings have implications for citizens’ livelihoods, with slower-than-expected growth potentially impacting employment opportunities and living standards. Addressing sectoral disparities and enhancing productivity across key industries are essential for inclusive economic development and social welfare.

Economic Outlook: While the survey highlights areas of resilience, such as agricultural growth and revenue collection, challenges persist in achieving sustainable growth and macroeconomic stability. Policy measures aimed at bolstering investment, promoting export-oriented industries, and addressing structural inefficiencies are imperative to navigate economic headwinds and foster robust growth in the future