ISLAMABAD, June 10: Pakistan’s economy grew by 5.8 per cent against original target of 7.2 per cent, according to the Economic Survey.
The survey conceded that there were failures in major areas, particularly GDP growth rate, agriculture, overall manufacturing, large-scale manufacturing, inflation, fiscal policy, monetary policy, exports, imports, current account deficit and trade balance during the first 10 months of the financial year ending on June 30.
“Pakistan missed major economic targets set for the outgoing financial year and the responsibility for the poor performance lies with the PML-Q government,” Finance Minister Syed Naveed Qamar said after releasing the survey.
“You start our accountability from tomorrow when we present the budget for the next year.”
Mr Qamar said the new government was facing dual challenges of pulling the country out of the current economic mess and removing difficulties of the common man by framing “correct and viable” economic policies.
He expressed the hope that the government would receive considerable budgetary support from “friendly countries and international donors” to help it improve the economy during the next financial year. He said he believed that the government might get about $3 billion by June 30 which would enable it to achieve some of the economic objectives.
He said that 2007-08 had been a “challenging year” as the economy experienced several unexpected political and economic events inside and outside the country. These events had an adverse impact on the economy, he added.
According to the survey, real GDP grew by 5.8 per cent in 2007-08 against revised estimates of 6.8 per cent and an original target of 7.2 per cent.
The agriculture sector’s performance was “far from satisfactory” because it grew by a mere 1.5 per cent. In contrast the growth rate was 3.7 per cent last year. “This was … mainly on account of dismal performance of major crops such as wheat and cotton.”
Overall growth in the manufacturing sector, accounting for 19 per cent of GDP, recorded a modest growth of 5.4 per cent against 8.2 per cent last year. Its contribution to this year’s growth also declined from 22 per cent last year to 17.2 per cent.
Global Inflation was high in almost every corner of the world, including Pakistan, creating extraordinary difficulties for governments all over the world. “The menace is rising food and energy prices.”
In Pakistan, besides rising food and fuel prices, the excessive burrowing of the government from the State Bank have been responsible for the rise in inflation.
The inflation rate, as measured by changes in Consumer Price Index (CPI), averaged 10.3 per cent during the first ten months (July-April) of the current fiscal year, 2007-08, as against 7.9 per cent in the comparable period of last year.
Food inflation is estimated at 15.0 per cent and non-food at 6.8 per cent, against 10.2 per cent and 6.2 per cent in the corresponding period of last year.
The overall fiscal deficit is estimated at Rs737.8 billion or 7.0 per cent of GDP for 2007-08 massive slippages in expenditure side on account of interest payments and subsidies are responsible for the rise in fiscal deficit.
Public debt was 53.5 per cent of GDP by end-March 2008 as against 55.2 per cent in end-June 2007. However, by the year end public debt is likely to be slightly higher than last year.
Large-scale manufacturing accounted for almost 70 per cent of overall manufacturing, registering a growth of 4.8 per cent in 2007-08 against the target of 12.5 per cent and last year's achievement of 8.6 per cent.
The construction sector is estimated to grow by 15,2 per cent in 2007-08 as against 17.9 per cent last year.
Services sector continued to maintain a solid pace of expansion at 8.2 per cent as against 7.6 per cent last year.
The per capita income in dollar terms has increased from $926 in 2006-07 to $1085 in 2007-08, showing an increase of 18.4 per cent.Real private consumption expenditure grew by 8.5 per cent in 2007-08 as against 4.8 per cent last year.
Total investment could not sustain its record level of 22.9 per cent of GDP of last fiscal year and declined to 21.6 per cent of GDP in 2007-08.
Fixed investment has declined to 20 per cent of GDP from 21.3 per cent last year. While public sector investment remained at last year’s level of 5.7 per cent, private sector investment declined from 15.6 per cent to 14.2 per cent of GDP this year.
National Savings at 13.9 per cent of GDP has financed 65 per cent of fixed investment in 2007-08 against 77.7 per cent last year. National savings as percentage of GDP stood at 13.9 per cent in 2007-08 – far lower than last year’s level of 17.8 per cent.
TIGHT MONETARY POLICY: During FY08, the SBP continued with a tight monetary policy stance, thrice raising the discount rate and increased the Cash Reserve Requirement (CRR) and Statutory Liquidity Requirement (SLR).
The money supply growth during July- May 10th 2007-08 (henceforth July-May) of the current fiscal year slowed to nine per cent compared to 14 per cent during the corresponding period of FY07.
Credit to private sector grew by 14.9 per cent during July-May FY08 as against 12.2 per cent in the same period of last year. Credit to private sector as per cent of GDP is continuously rising since 2001-02.
Overall exports recorded a growth of 10.2 per cent during the period under review against a growth of 3.6 per cent in the same period last year.
In absolute terms, exports increased from $13.8 billion to $15.3 billion.
Imports grew by 28.3 per cent to $32.1 billion on the back of an extraordinary surge in imports of petroleum products asnd food group items and other raw material.
Non-oil imports were up by 22.5 per cent and non-oil and non-food imports also surged by 18.8 per cent during the same period.
During the period, merchandise trade deficit worsened sharply to $17 billion against $11 billion in the same period last year because of disproportionate increase of 28.3 per cent in imports that more than offset a modest export growth 10.2 per cent.
Pakistan’s current account deficit widened to $11.6 billion (including official transfers) during July-April FY08 against $6.6 billion in the comparable period of last year, an increase of 75.6 per cent.
Even when compared to the size of national economy, the current account deficit was substantially high at 6.9 per cent of GDP during July-April FY08 against 4.6 per cent for the same period last year.
Workers’ remittances registered considerable growth during the same period, growing by 19.5 per cent to $5.3 billion on top of 22.7 per cent growth in the corresponding period of last year.
Pakistan’s total foreign exchange reserves stood at $12.3 billion as of end-April 2008, significantly lower than end June 2007 level of $15.6 billion.
The rupee, after remaining stable for more than four years, depreciated against the US dollar, falling by 6.4 per cent during July-April 2007-08.
External debt and liabilities rose to $45.9 billion from $ 40.5 billion – an increase of $5.4 billion or 13.3 per cent in the first nine months (July-March) of FY 2007-08 – highest increase in about a decade.
During the first nine months of this fiscal year, the total increase in external liabilities amount to $5.4 billion, of which $4.2 billion is the exchange rate translation effect while net disbursement of loan was just $1.2 billion.
All-round failure defines performance
ISLAMABAD, June 10: Pakistan’s economy grew by 5.8 per cent against original target of 7.2 per cent, according to the Economic Survey.
The survey conceded that there were failures in major areas, particularly GDP growth rate, agriculture, overall manufacturing, large-scale manufacturing, inflation, fiscal policy, monetary policy, exports, imports, current account deficit and trade balance during the first 10 months of the financial year ending on June 30.
“Pakistan missed major economic targets set for the outgoing financial year and the responsibility for the poor performance lies with the PML-Q government,” Finance Minister Syed Naveed Qamar said after releasing the survey.
“You start our accountability from tomorrow when we present the budget for the next year.”
Mr Qamar said the new government was facing dual challenges of pulling the country out of the current economic mess and removing difficulties of the common man by framing “correct and viable” economic policies.
He expressed the hope that the government would receive considerable budgetary support from “friendly countries and international donors” to help it improve the economy during the next financial year. He said he believed that the government might get about $3 billion by June 30 which would enable it to achieve some of the economic objectives.
He said that 2007-08 had been a “challenging year” as the economy experienced several unexpected political and economic events inside and outside the country. These events had an adverse impact on the economy, he added.
According to the survey, real GDP grew by 5.8 per cent in 2007-08 against revised estimates of 6.8 per cent and an original target of 7.2 per cent.
The agriculture sector’s performance was “far from satisfactory” because it grew by a mere 1.5 per cent. In contrast the growth rate was 3.7 per cent last year. “This was … mainly on account of dismal performance of major crops such as wheat and cotton.”
Overall growth in the manufacturing sector, accounting for 19 per cent of GDP, recorded a modest growth of 5.4 per cent against 8.2 per cent last year. Its contribution to this year’s growth also declined from 22 per cent last year to 17.2 per cent.
Global Inflation was high in almost every corner of the world, including Pakistan, creating extraordinary difficulties for governments all over the world. “The menace is rising food and energy prices.”
In Pakistan, besides rising food and fuel prices, the excessive burrowing of the government from the State Bank have been responsible for the rise in inflation.
The inflation rate, as measured by changes in Consumer Price Index (CPI), averaged 10.3 per cent during the first ten months (July-April) of the current fiscal year, 2007-08, as against 7.9 per cent in the comparable period of last year.
Food inflation is estimated at 15.0 per cent and non-food at 6.8 per cent, against 10.2 per cent and 6.2 per cent in the corresponding period of last year.
The overall fiscal deficit is estimated at Rs737.8 billion or 7.0 per cent of GDP for 2007-08 massive slippages in expenditure side on account of interest payments and subsidies are responsible for the rise in fiscal deficit.
Public debt was 53.5 per cent of GDP by end-March 2008 as against 55.2 per cent in end-June 2007. However, by the year end public debt is likely to be slightly higher than last year.
Large-scale manufacturing accounted for almost 70 per cent of overall manufacturing, registering a growth of 4.8 per cent in 2007-08 against the target of 12.5 per cent and last year's achievement of 8.6 per cent.
The construction sector is estimated to grow by 15,2 per cent in 2007-08 as against 17.9 per cent last year.
Services sector continued to maintain a solid pace of expansion at 8.2 per cent as against 7.6 per cent last year.
The per capita income in dollar terms has increased from $926 in 2006-07 to $1085 in 2007-08, showing an increase of 18.4 per cent.Real private consumption expenditure grew by 8.5 per cent in 2007-08 as against 4.8 per cent last year.
Total investment could not sustain its record level of 22.9 per cent of GDP of last fiscal year and declined to 21.6 per cent of GDP in 2007-08.
Fixed investment has declined to 20 per cent of GDP from 21.3 per cent last year. While public sector investment remained at last year’s level of 5.7 per cent, private sector investment declined from 15.6 per cent to 14.2 per cent of GDP this year.
National Savings at 13.9 per cent of GDP has financed 65 per cent of fixed investment in 2007-08 against 77.7 per cent last year. National savings as percentage of GDP stood at 13.9 per cent in 2007-08 – far lower than last year’s level of 17.8 per cent.
TIGHT MONETARY POLICY: During FY08, the SBP continued with a tight monetary policy stance, thrice raising the discount rate and increased the Cash Reserve Requirement (CRR) and Statutory Liquidity Requirement (SLR).
The money supply growth during July- May 10th 2007-08 (henceforth July-May) of the current fiscal year slowed to nine per cent compared to 14 per cent during the corresponding period of FY07.
Credit to private sector grew by 14.9 per cent during July-May FY08 as against 12.2 per cent in the same period of last year. Credit to private sector as per cent of GDP is continuously rising since 2001-02.
Overall exports recorded a growth of 10.2 per cent during the period under review against a growth of 3.6 per cent in the same period last year.
In absolute terms, exports increased from $13.8 billion to $15.3 billion.
Imports grew by 28.3 per cent to $32.1 billion on the back of an extraordinary surge in imports of petroleum products asnd food group items and other raw material.
Non-oil imports were up by 22.5 per cent and non-oil and non-food imports also surged by 18.8 per cent during the same period.
During the period, merchandise trade deficit worsened sharply to $17 billion against $11 billion in the same period last year because of disproportionate increase of 28.3 per cent in imports that more than offset a modest export growth 10.2 per cent.
Pakistan’s current account deficit widened to $11.6 billion (including official transfers) during July-April FY08 against $6.6 billion in the comparable period of last year, an increase of 75.6 per cent.
Even when compared to the size of national economy, the current account deficit was substantially high at 6.9 per cent of GDP during July-April FY08 against 4.6 per cent for the same period last year.
Workers’ remittances registered considerable growth during the same period, growing by 19.5 per cent to $5.3 billion on top of 22.7 per cent growth in the corresponding period of last year.
Pakistan’s total foreign exchange reserves stood at $12.3 billion as of end-April 2008, significantly lower than end June 2007 level of $15.6 billion.
The rupee, after remaining stable for more than four years, depreciated against the US dollar, falling by 6.4 per cent during July-April 2007-08.
External debt and liabilities rose to $45.9 billion from $ 40.5 billion – an increase of $5.4 billion or 13.3 per cent in the first nine months (July-March) of FY 2007-08 – highest increase in about a decade.
During the first nine months of this fiscal year, the total increase in external liabilities amount to $5.4 billion, of which $4.2 billion is the exchange rate translation effect while net disbursement of loan was just $1.2 billion.
