Pakistan's economy shrinks to 0.29% in financial year 2022-23

 Pakistan's economy missed all the targets set in the current budget 2022-23

Pakistan’s provisional GDP growth rate shrinks to 0.29 percent for the outgoing financial year 2022-23 against the revised figure of 6.1 percent in the last financial year 2021-22. The target of GDP growth rate for 2022-23 was 5%. The curbs imposed on the imports to avoid sovereign default are the main cause of this low growth. The industrial sector is hit the hardest.

Despite severe floods, the agricultural sector still posted 1.6% growth, beating all forecasts of contraction due to a devastating impact on crops. The industrial sector contacted by 2.94%. But the services sector -- the single largest sector in the economy -- showed nominal growth of 0.9%.

The government has missed all sectoral targets, thanks to its economic mismanagement that also caused massive layoffs and contributed towards the 59-year-high inflation rate of 36.4%.

This low level of economic growth means that poverty and unemployment are on the rise. But no official data is available regarding the unemployment and poverty.  The size of the GDP in the rupee term stood at Rs 38.927 trillion for the outgoing fiscal year against Rs 38.814 trillion for the last financial year 2021-22.

According to the Chief Economist of Planning Commission Dr Nadeem Javaid, the devastating floods, lingering political instability, global recession and Ukraine war accelerated the woes for Pakistan economy but the resilience shown by the country’s different economic sectors produced a slight positive growth in the current fiscal year.

 The National Accounts Committee (NAC) meeting, which met under the chairmanship of Secretary Planning Syed Zafar Ali Shah, approved provisional figure of GDP growth rate at 0.29 percent with agriculture growth of 1.55 percent, the industrial sector contracted and achieved negative growth of -2.94 percent and services sector achieved positive growth of 0.86 percent.

The agriculture sector experienced the overall growth of positive 1.55 percent, the growth of important crops remained negative 2.49 percent but the production of wheat at 27.6 million tons helped the agricultural sector to achieve positive growth. The cotton achieved just 4.5 million bales and achieved negative 41 percent growth. The livestock achieved positive growth of 3.78 percent.

The LSM growth remained negative at 7.98 percent but interestingly small-scale manufacturing achieved positive growth of 9.03 percent. The construction sector achieved negative growth of 5.53 percent. The electricity generation and gas distribution achieved positive growth of 6.03 percent which also resulted in raising eyebrows. The services sector achieved positive growth of 0.86 percent. The wholesale and retail trade clinched negative growth of 4.46 percent.

The government has inflicted heavy losses on the economy by devaluing the rupee and increasing the utility prices in the hope of the getting a deal from the International Monetary Fund (IMF). In the end, neither the IMF programme could be revived nor could the economy be saved from disaster.

It is a recession in growth, but not an overall recession in economy, said Dr Nadeem Javaid, chief economist of the Planning Commission.

                                                                            Khalid Bhatti