ISLAMABAD: The Annual Plan Coordination Committee (APCC) reviewed proposed annual plan for fiscal year 2024-25, noting that economic outlook for the next year was positive with a growth target of 3.6%.
The growth prospects hinges upon political stability, exchange rate, macroeconomic stabilization under International Monetary Fund’s (IMF) programme and expected fall in global oil and commodity prices.
According to document shared by Planning Commission, agriculture is expected to grow at 2% in 2024-25 keeping in view the high base effect.
The Industrial sector is expected to recover in 2023-24 with a targeted growth of 4.4% on the back of expected Large Scale Manufacturing (LSM) growth of 3.5%. Industrial sector is expected to get boost from improved inputs and energy supplies on the back of anticipated fall in global oil and commodity prices.
Services sector is also expected to grow at 4.1% which will be complemented by expected growth of 3.1% in commodity producing sectors.
According to the document, the investment-to-GDP ratio is expected to increase from 13.1% in 2023-24 to 14.2% in 2024-25 due to expected economic turnout, improved business environmentand political stability. National savings are targeted at 13.3% of GDP.
Fiscal deficit is expected to narrow down on the back of fiscal consolidation measures and domestic average inflation is expected to moderate to 12% owing to falling global inflation.
The committee also reviewed annual plan for fiscal year 2023-24, observing that Pakistan’s economy faced significant challenges at the beginning of 2023-24, primarily due to lagged impacts of economic disruptions of previous year. However, the economy moderately recovered in 2023-24 and grew by 2.4%.
During the year 2023-24, the primary driver of growth was agriculture sector, posting a growth rate of 6.3%, owing to bumper outputs of wheat, cotton and rice.
Industrial sector grew by 1.2% mainly due to slowdown in large-scale manufacturing activities. However, there was growth in mining and quarrying, small-scale manufacturing, and construction.
Services sector also registered 1.2% growth as wholesale and retail trade experienced a mere 0.3% growth. Transport, storage and communications also recorded a low growth of 1.2% due to subdued demand.
Total revenue collection grew by 41% during July-March 2023-24 that outpaced the 36.6% growth of total expenditure. Both tax and non-tax revenues grew by 29.3% and 89.8%, respectively. Markup expenditure constituted 40% of total expenditure.
During July-April 2023-24, average inflation was recorded at 26% as compared to 28.2% in the same period of last year. A continuously declining inflationary trend has been observed since January 2024.
The external sector encountered several challenges at the start of 2023-24. Subsequently, narrowing of current account deficit, inflows from IMF / other foreign donors and measures taken by the government / SBP improved the foreign exchange reserves position that stabilized exchange rate.
