ISLAMABAD: The government seeks growth of gross domestic product (GDP) at 2.1 per cent for the fiscal year 2020-21, with targets set for three key areas of the national economy – agriculture, industry and services sectors.

However, the Annual Development Plan (ADP) document released on Friday, underlines that growth targets are subject to risks of extreme weather fluctuations, the ongoing Covid-19 pandemic, interruption in envisaged reforms and non-aligned monetary and fiscal policies.

Drawing the outlook for 2020-21, the ADP document notes that the economic landscape in the coming year predominantly depends upon how the pandemic unfolds and effectiveness of the government’s efforts to control locusts.

Even if the lockdown is completely lifted before the commencement of next fiscal year, the second round of Covid-19’s impact will still affect the country’s growth performance.

The overall GDP growth is expected to pick up in 2020-21 while rehabilitation and recovery of industrial and services sectors will boost growth prospects. Monetary easing and debt relief will also improve fiscal position. Inflation is expected to remain in single digit and the external sector will also improve due to resumption of remittance inflows and better exports performance, the document adds.

Agriculture: Under the ADP 2020-21, agriculture sector is targeted to grow by 2.8pc on the basis of expected contributions of important crops. The projected growth of important crops is 1.9pc; other crops 1.5pc; cotton ginned 0.9pc; livestock 3.5pc; fisheries 1.5pc; and forestry 2.1pc.

The production targets for important crops such as wheat and cotton are expected to be attained given that the quality and quantity of agriculture inputs is ensured. An all encompassing agriculture package has been given to farmers. Moreover, consistent availability of water, certified seeds, fertilisers, pesticides and agriculture credit facilities will help to achieve the targeted growth, the ADP document adds.

Industry: The industrial sector is targeted to grow by 0.1pc during 2020-21, while manufacturing sector is targeted to contract by 0.7pc based upon LSM contraction of 2.5pc, small scale and household manufacturing growth of 6pc.

Moreover, construction and electricity generation and gas distribution are targeted to grow by 1.4pc and 3.5pc, respectively. Mining and quarrying sector is projected to grow by 0.5pc. Industry is expected to pick up pace in 2020-21 with the implementation of envisaged export promotion and industrial development measures.

The private sector investment in industrial sector is expected to rise in 2020-21 as private sector will be encouraged to take lead in spurring economic activity while the public sector provides necessary policy and regulatory support.

Likewise, construction in housing sector — as envisaged in the government’s housing scheme and allied infrastructure projects — is expected to reinvigorate production in cement, iron and steel. Overall, it is expected that improved business conditions and consistent policies will contribute towards achieving the target of industrial sector growth for 2020-21.

Services: Services sector is set to grow at 2.6pc in 2020-21. Wholesale and retail trade along with transport, storage and communication, two biggest sub-sectors of services, are set to grow at 1.1 and 0.9pc, respectively. Finance and insurance has potential to grow in upcoming year by 3.0pc.

General government services, other private services, and housing services are expected to post healthy growth of 4.6pc, 4.2pc and 4pc, respectively. Housing initiative of the current government is expected to support growth in different services and health related interventions in the backdrop of Covid-19 will generate growth in other private services.

Investment and Savings: Investment for the year 2020-21 is expected to increase slightly to 15.5pc of GDP in order to achieve sustained and inclusive growth in view of post corona crisis. Fixed income is expected to grow to 13.9pc of GDP in 2020-21. National savings are targeted at 13.8pc of GDP. The focus is to replace consumption led growth with investment led growth.

New monetary policy posture with reduction in interest rate will encourage investors and consumer financing will boost economic activity. Numerous measures to improve ease of doing business are expected to boost capital formation and attract both domestic and foreign investment.

CPEC outlook: Under the China-Pakistan Economic Corridor (CPEC), 2020-21 is planned to be the year of industrial cooperation, agriculture modernisation and socio-economic development in addition to the ongoing projects in infrastructure and energy.

Moreover, projects in petroleum sector are envisaged to be taken up in years to come. Projects in the existing and the newly established areas would enhance the capacity of Pakistan that would result in improving the economic competitiveness of the country.

Published in Dawn, June 13th, 2020