GDP growth rate may drop below 1pc: official

[Naveed Yaseen]

By Khalid Mustafa
ISLAMABAD: Pakistan is feared to experience negative growth this year in all sectors of economy except the agriculture sector, a senior official at Ministry of Finance confided to The News.

Growth in agriculture sector is expected around 4.5 per cent depending on wheat production, if this target was missed the Gross Domestic Product growth rate would be even less than one percent, he said.

Pakistan experienced negative growth in 1952 and if the agriculture sector does not perform up to expectations, then once again the country would be exposed to negative growth of 0.3 per cent.

In the last fiscal year, the agriculture growth was 1.5 per cent and now the country is expecting 4 to 4.5 per cent growth, which is to be the only factor that would take the GDP growth into positive zone.

“We are expecting negative growth by the end of the ongoing fiscal in all sectors of economy except agriculture. The massive negative growth is to hit Large Scale Manufacturing (LSM) and Construction,” the official said keeping in view the preliminary estimates worked out with regard to the expected GDP growth by the end of ongoing fiscal.

“Electricity & and gas distribution, Transport And Communication, Wholesale and Retail Trade, Finance and Banking, Public Administration and Defence and Social and Community Services are also not likely to perform, but the Agriculture sector would be in the positive zone with no major positive impact on overall GDP growth,” he said.

The government is alarmed over the performance in the said sectors of economy and is all set to revise the targets of GDP growth, tax revenue, inflation and exports with International Monetary Fund (IMF) which has extended to Pakistan the 23 months $7.6 billion bailout package under Stand By Arrangement (SBA).

For the ongoing fiscal, the official said, IMF had earlier fixed the target of 3.4 percent GDP growth, 21 percent average inflation, 12 percent growth in export and Rs1,360 billion tax revenue.

Pakistan and IMF would revise the targets during the appraisal process by IMF review mission that is to be held in Dubai during February 14 to 24 period.

Pakistan and IMF would revise downward the target of GDP to about less than one percent, as the global economic outlook has entirely changed from the world scenario during the October-September 2008 period because of the massive decline in oil and commodity prices in the international market.

The official said that Large Scale Manufacturing has 19 per cent weight in GDP growth and it is expected to experience negative 6.5pc growth in this fiscal.

Construction sector with 2.7pc weight on GDP would witness six per cent negative growth against 15pc growth in 2007-08.

Electricity and gas distribution has 1.6pc weight in GDP and its growth is likely to decline 5.5pc from 14.7pc in last fiscal. Mining and Quarrying has 2.5pc in GDP growth and it is likely to experience 3pc growth in this financial year. “This means the overall growth in industrial sector would be in negative zone,” the official said.

Transport and communication sector growth dropped to 1.5pc from 4.4pc in last financial year. Likewise zero growth in wholesale and retail trade is likely to decline to zero per cent from 6.4pc in 2007-08. This particular sector owns the weight of 17 percent in GDP growth of the country.

Finance and banking sector depicting 17pc growth in last fiscal is expected to show negative growth of 4.5pc. The weight of this vital sector stands at 6.5pc in GDP.

The government is expecting status quo in growth of 3.5 percent in ownership of dwellings sector. This sector carries the weight of 2.6 percent in GDP growth. Public Administration and Defence, which has weight of 6.5pc in GDP is likely to witness 5pc growth against 10.9pc in last fiscal year.

http://www.thenews.com.pk/daily_detail.asp?id=160830