ISLAMABAD: Painting a rosy picture of country’s economy in the fourth year of Pakistan Muslim League-Nawaz’s five-year stint in power, the government on Thursday claimed that the country’s Gross Domestic Product (GDP) grew by 5.28% during the outgoing fiscal year 2016-17, the highest in 10 years despite ‘several internal and external challenges’.
Though the GDP growth missed the target of 5.7%, Finance Minister Ishaq Dar claimed that for the first time, the overall size of Pakistan’s economy had surpassed the threshold of $300 billion, adding that Pakistan’s ‘growth story’ was being acknowledged at the international level. He predicted that the size of the country’s economy would surpass that of Canada, Italy and South Korea by 2050.
While launching Pakistan Economic Survey for the outgoing fiscal year 2016-17 at P Block auditorium, the finance minister announced that the growth rate for the next fiscal year had been set at 6%. He said that the growth rate was just 3% in 2013 when PML-N government took over but has now risen to almost 5.3%.
Deficit: The minister said fiscal deficit has been recorded at 3.9% of the GDP during the first nine months of the current fiscal year against 3.5% during the corresponding period last year. He said the deficit widened due to less than expected tax revenues owing to tax relief measures introduced by the government to promote investment. “This year, the deficit would amount to 4.2% which stood at 8.2% in 2012-13,” he said, and added that Pakistan won’t need to go to the IMF till 2019. “Our home-grown industries will be able to help us,” he hoped.
However, Dar said the current account deficit is estimated to widen to $8.3 billion by the end of the outgoing fiscal year against $2.5 billion in the previous fiscal year, a staggering increase which the minister attributed to imports of heavy machinery for projects related to China-Pakistan Economic Corridor (CPEC). He said the import of heavy machinery rose by 70%, textile machinery 23%, construction machinery 67% and agriculture machinery 37%, which, according to him, heavily inflated the import bill.
Inflation: The headline inflation consumer price index (CPI) averaged at 4.09% during July-April 2017 against target of 6%, showing that inflation will remain below the target, according to the survey report. Food price inflation remained at 3.86%, while prices of non-food items grew by 4.25%. “The current year started with inflation at 4.1% in July 2016, rose to 4.9% in March 2017 and then slowed down to 4.8% in April 2017,” it said, and added that the uptick in inflation is due to revival of international commodity and oil prices along with a rise in domestic demand due to pick up of economic activities.
Debt: On public debt, the report said the ratio had reduced from the level in 2012-13. “Public debt was at 53.1% of GDP in 2008. It went up to 60.2% of GDP and it is now at 59.3% of GDP,” it maintained.
Investment: The report said total investment has reached Rs 5.03 trillion as compared to Rs 4.53tr of the last year, showing a growth of 11.05% in FY 2017. “Investment to GDP ratio has reached 15.78% in FY2017. The major FDI inflows during the period under review were from China ($744.4m), Netherlands ($478.6m), France ($171.0m), Turkey ($137.7m), US ($103.2m), UAE ($48.4m), UK ($47.6m), Italy ($47.4m), Japan ($42.1m) and Germany ($40.5m). Food, power, construction, electronics, oil & gas exploration, financial business and communication sectors remained the main recipients,” the report revealed.
Remittances: According to the survey report, remittances reached the level of $15.6bn in July-April FY2017 compared with $16bn in July-April FY2016. Remittances are expected to reach $19.5bn for the outgoing year. During July-April FY2017, the major share of remittances was from Saudi Arabia 29.0% ($4,517.2m), UAE 22.2% ($3,468.4m), USA 12.4% ($1,929.3m), other GCC countries 12.1% ($1,881.2m), UK 11.8% ($1,846.7m), EU 2.4% ($374.4m) and Other Countries 10.1% ($1,579.0m). The finance minister is scheduled to present the budget for the next fiscal year in the National Assembly on Friday (today).
