ISLAMABAD: Pakistan’s economy performed beyond expectations with all major macroeconomic indicators showing positive trend amid the Covid-19 pandemic, resulting in a 3.94 per cent economic growth rate this fiscal year, compared to a revised negative 0.47pc in 2019-20.

The growth figures came as a surprise as the State Bank of Pakistan (SBP) had estimated GDP growth at 3pc, while the finance ministry’s projection was slightly on the lower side. The growth projection of multilateral donors — the International Monetary Fund and World Bank — was between 1.3pc and 1.5pc for the fiscal year 2020-21.

For a number of years, the services sector was a major reason for economic growth in the country and it has witnessed a growth of 4.43pc this year. The services sector has been impacted this year too partially by the Covid-related shrinkage in service delivery in major sectors.

However, the agriculture sector posted a paltry 2.77pc growth, while industrial output grew 3.57pc. The surge in growth is partly explained by the low-base of last year when the economy contracted due to effects of the Covid-19 pandemic.

Figure defies IMF, WB projection and exceeds even SBP estimate

These figures were framed in the 103rd meeting of the National Accounts Committee, chaired by Planning, Development and Reform Secretary Hamed, to review the Gross Domestic Product (GDP).

Provisional estimates for the fiscal year 2020-21 for GDP and Gross Fixed Capital Formation (GFCF) have been presented on the basis of the latest data available for six to nine months, said an official announcement on Friday, painting a better picture of the overall economy in the third year of the Pakistan Tehreek-i-Insaf government.

Prime Minister Imran Khan took to Twitter, saying the higher GDP growth reflects the success of his government’s economic policies while managing the Covid-19 pandemic. “This reflects the success of our economic policies while managing the pandemic. Our V-shaped recovery is balanced between three major sectors — agriculture, industry and services,” he added.

The country’s GDP size stands at Rs47.709 trillion for 2020-21, compared to Rs41.556tr the previous year, showing a growth of 14.8pc. But contrary to this, the GDP size surged to $296 billion in 2020-21 against $263bn in 2019-20, an increase of $33bn or 12.54pc. The size of the economy grew in dollar terms as the rupee strengthened against the greenback — the highest-ever increase in any year.

The per capita income has been calculated at Rs246,414 for 2020-21, compared to Rs215,060 in 2019-20, showing a growth of 14.6pc. The per capita income in dollar terms has jumped by 13.4pc to $1,543 during this fiscal year from $1,361 last year.

Planning and Development Minister Asad Umar said the per capita income had posted a growth due to a combination of GDP growth and strengthening of the rupee against the dollar. He said the growth in GDP in a period in which Covid-19 posed a huge challenge to the economy was extremely gratifying and proof of success of the government’s economic policies.

Federal Minister for Energy Hammad Azhar termed the GDP growth a remarkable recovery, saying unlike past growth stints, forex reserves have also grown. He also pointed out surplus current account and said industry was behind this growth. He said the final growth figures might further go up depending on final estimation of whole year figures of wheat and large-scale manufacturing.

Agriculture sector

The agriculture sector grew by 2.77pc during the fiscal year 2020-21 against 3.31pc in 2019-20. The growth of important crops this year is 4.65pc on the back of the historic highest-ever production of wheat, rice and maize. Sugarcane registered the second highest-ever production.

The growth in production of wheat, rice, sugarcane and maize stands at 8.1pc, 13.6pc, 22pc and 7.38pc, respectively. However, cotton has witnessed a negative growth of 22.8pc, which also resulted in a 15.6pc decline in cotton ginning.

Other crops, including vegetables, fruits and green fodder, showed a positive growth of 1.41pc.

The livestock sector registered a growth of 3.1pc, which is a deviation from its historical growth, primarily because of shrinkage in demand for dairy and poultry.

Forestry growth declined to 1.4pc from last year’s 2.29pc.

Industrial sector

The overall industrial sector has witnessed a positive growth of 3.57pc this year as against a negative growth of 3.77pc last year. However, value-addition in the mining and quarrying sector has declined by 6.5pc.

The large-scale manufacturing (LSM) sector, which is driven primarily by QIM data (from July 2020 to March 2021), showed an unprecedented growth of 9.29pc. Major contributors to this growth are textile (5.9pc), food beverage & tobacco (11.73pc), petroleum products (12.71pc), pharmaceuticals (12.57pc), chemicals (11.65pc), non-metallic mineral products (24.31pc), automobiles (23.38pc) and fertiliser (5.69pc).

The electricity and gas sub-sector has declined by 22.96pc mainly due to lower allocation of subsidies by the government to power distribution companies, low increase in output and a higher proportional increase in intermediate consumption.

Construction activity has increased by 8.34pc mainly due to an increase in general government expenditure and private sector construction-related expenditures.

Services sector remained a major growth driver for many years and this year it has witnessed a growth of 4.43pc as per provisional estimates. The wholesale and retail trade sector grew by 8.37pc primarily because of an increase in marketable surplus.

The transport, storage and communication sector has declined by 0.61pc. The finance and insurance sector showed an increase of 7.84pc. The remaining components of services — housing, general government and other private services — have witnessed a positive growth of 4.01pc, 2.20pc and 4.64pc, respectively.

Published in Dawn, May 22nd, 2021