The targeted economic growth for the outgoing year was missed by a long shot. Last year, Finance Minister Ishaq Dar announced a target of five percent GDP growth but the tally could only muster up 4.24 percent.
The performance of the agriculture and manufacturing sectors is more revealing of why targeted growth was not achieved. Agriculture comprises 20.9 percent of the GDP whereas manufacturing contributes another 13 percent of national income. The former posted growth of 2.9 percent in FY15, marginally higher than 2.7 percent in the previous fiscal while the latter grew just 3.17 percent, which is lower than the previous year’s sectoral growth of 4.46 percent.
Production of major crops, which includes cotton, wheat, rice and sugarcane, mustered a paltry 0.3 percent growth in FY15, over the previous fiscal year. Minor crops grew just one percent, year on year. In fact it is the livestock sector which comprises more than half of the agriculture output that posted 4.1 percent growth. The efforts of this segment along with forestry and fishing that helped agriculture sector in achieving a higher growth.
While the country’s cotton production has improved by nearly ten percent in the outgoing fiscal, depressed international cotton prices have diluted the benefit accrued from it. The wheat crop was dented by September 2014 floods which destroyed about 800,000 metric tonnes of the staple food commodities. Its production of 25.478 million tonnes in the concluded fiscal was lower than the previous year’s tally.
Meanwhile area under cultivation of sugarcane dropped by 4.5 percent in FY15; as did sugarcane production (down to 62.7 million tonnes in FY15 as against 67.5 million tonnes in FY14). Maize production also reduced by five percent over the previous year.
In short, all but one major crop received a bashing in FY15.
Large-scale manufacturing makes up four-fifths of the manufacturing sector. LSM growth in the outgoing year was reported at 2.38 percent for FY15 which is a mere slice of the four percent growth reported last year.
Other important segments including electricity distribution and generation, and construction were also sluggish in the outgoing fiscal. The former posted muted growth of 1.94 percent in FY15 as against 5.57 percent in FY14. Construction grew by 7.05 percent year on year, compared to 7.25 percent in FY14.
The automobile sector appears as a lone success within the manufacturing industries’ performance during FY15. Lower sales tax on tractors and the introduction of new car models helped that industry contribute to the otherwise waning growth tally of manufacturing sector.
Almost half of the country’s work force is employed in the agriculture sector. The industrial sector is the other major provider of jobs. Stagnating growth in these sectors amplifies the risk of higher unemployment. The share of agriculture sector in total employment has dipped slightly in the outgoing fiscal from 43.7 percent, to 43.5 percent. But, the report card for FY15 claims that unemployment has dropped marginally, from 6.24 percent in FY14, to six percent in FY15. But this unemployment rate is based on the assumption that the labour force has shrunk from 60.34 million in FY14 to 60.09 million in the outgoing fiscal.
The government is mindful of the limitations caused by energy crisis. The survey cites ongoing energy projects as potential drivers for economic activity in the upcoming year and also as a source of energy for the power-deprived industries.
Highlights of Economic Survey
- Pakistan is improving quantitatively and qualitatively as growth achieved 4.24 percent is broad-based and is the highest achievement since 2008-09.
- Major success of the outgoing fiscal year includes: picking up economic growth, contained at lowest level since 2003, improvement in tax collection, reduction in fiscal deficit, worker remittances touches new heights, successful launching of Sukuk, foreign xchange reserves significantly increased and stock market created new history.
- The GDP growth accelerates to 4.24 percent in 2014-15 against the growth of 4.03 percent recorded in the same period last year.
- The agriculture sector accounts for 20.9 percent of GDP and 43.5 percent of employment.
- The agriculture growth stood at 2.9 percent during July-March, 2014-15 as compared to 2.7 percent during the last year. The agriculture sector has four sub-sectors: crops, livestock, fisheries and forestry.
- During 2014-15, cotton production stood at 13,983 thousand bales and registered an increase of 9.5 percent.
- Wheat production decreased to 25,478 thousand tonnes showing a decrease of 1.9 percent.
- Rice production has increased to 7,005 thousand tonnes showing an increase of 3.0 percent.
- Sugarcane production has decreased to 62,652 thousand tonnes, and registered a decrease of 7.1 percent.
- Maize production had decreased to 4,695 thousand tonnes showing a decrease of 5.0 percent.
- Other crops that contributed 11.1 percent value addition in agriculture witnessed a positive growth of 1.1 percent in 2014-15, against negative growth of 5.4 percent during the same period last year.
- Gram production has increased to 484 thousand tonnes showing an increase of 21.3 percent.
- During July-March 2014-15, the production of Potatoes, Moong, Onions and Chillies increased by 6.3 percent, 6.2 percent, 1.3 percent and 0.3 percent, respectively. While production of other pulses Mash and Masoor (Lentil) decreased by 12.7 and 5.8 percent, respectively.
- During July-March, 2014-15, the banks disbursed Rs. 326.0 billion which is 65.2 percent of the overall annual target of Rs. 500 billion and 27.5 percent higher than disbursement of Rs. 255.7 billion made during the corresponding period last year.
- The industrial sector, which contributes 20.30 percent in GDP, recorded growth at 3.62 percent as compared to 4.45 percent last year.
- Growth of manufacturing is registered at 3.17 percent compared to the growth of 4.46 percent last year.
- Small-scale manufacturing witnessed growth at 8.24 percent against the growth of 8.29 percent last year.
- LSM has registered the growth of 2.38 percent as compared to the growth of 3.99 percent last year.
- The construction sector registered a growth of 7.05 percent against the growth of 7.25 percent of last year.
- Mining and quarrying sub-sector witnessed a growth of 3.84 percent as compared to 1.65 percent growth of last year.
- Electricity generation & distribution and Gas Distribution sub-sector has registered growth at 1.94 percent as compared to 5.57 percent in last year.
- The share of the services sector has reached to 58.8 percent in 2014-15. It has witnessed a growth rate of 4.95 percent as compared to 4.37 percent last year.
- Per capita income in dollar terms recorded a significant growth of 9.25 percent in 2014-15 as compared to 3.83 percent last year. The per capita income in dollar terms has reached to $1,512 in 2014-15.
- Total investment is recorded at 15.12 percent of GDP, Fix investment is registered at 13.52 percent of GDP. Private investment is witnessed at 9.66 percent of GDP.
- Total investment witnessed a growth of 10.21 percent as compared to 8.4 percent last year. Public investment recorded an impressive growth rate at 25.56 percent as compared to 6.82 percent last year.
- National savings are 14.5 percent of GDP in 2014-15 compared to 13.7 percent in 2013-14.
- Foreign private investment has reached to $1666.2 million during July-April 2015 as compared to $1050.3 million showing 58.6 percent higher as compared to last year. Out of total foreign investment, the FDI inflow has reached to $2057.3 million.
- The major inflow of FDI is from US, Hong Kong, UK, Switzerland and UAE. Oil & gas exploration, financial business, power, communications and Chemicals remained major recipients.
- During July-March of 2014-15, fiscal deficit as percent of GDP was contained at 3.8 percent against 3.9 percent in the same period of fiscal year 2013-14.
- The inflation rate measured by the changes in CPI, averaged at 4.8% during July-April, 2014-15 against 8.7% in the comparable period last year, which is lowest since 2003.
- In 2014, the KSE-100 Index gained 6,870 points from 25,261 to 32,131 level, generating a handsome return of 27% (31% return in US$ terms) for the investors.
- Further, market capitalisation has increased by 4.03% or from Rs.7,022.70 billion on June 30, 2014 to Rs.7,305.81 billion on April 30, 2015.