ISLAMABAD): Despite considerable international geo-political downside risks and emerging commodities super cycle phenomena, the government on Friday said that Pakistan’s economy would reach around the original National Economic Council (NEC) economic growth target of 4.8% for fiscal year 2022 (FY22).
According to a Mid-year Economic Review (July-Dec 2021-22) issued by the ministry of Planning, the agriculture sector is expected to achieve envisaged full year growth target of 3.5% keeping in view impressive performance of Kharif crop and prospects of good wheat crop, however, agriculture growth is mainly contingent upon availability of certified seed and pesticides during the Rabi season.
The industrial sector was projected to grow by 6.5% based upon Large Scale Manufacturing (LSM) target of 6%. However, with the revised full year number of LSM for FY22, achieving targeted 6% growth is now unlikely.
Construction sector is expected to post healthy growth due to the construction amnesty scheme and concessional credit availability for the housing sector, the report added.
It said the services sector growth is mostly reliant upon performance of commodity producing sectors and imports. The expected revival in the commodity producing sector and higher than anticipated growth in imports will push services sector growth upward. Higher financial intermediation, and 38% growth in IT related services will also provide additional boost to the Social and Community services sector.
The report added that the Annual Plan 2021-22, which was presented to the NEC meeting held on June 07 2021, was presented against the backdrop of partial closure of economic activities due to containment measures to check the rapid spread of COVID-19 pandemic.
Therefore, keeping in view the uncertainties, cautious approach was adopted to set growth targets for FY22. The Annual Plan for 2021-22 envisaged GDP growth at 4.8% based upon contributions from agriculture (3.5%), industry (6.5%) and services (4.7%).
During first half of current fiscal year (1HFY22), industrial and services sector activity picked up and agriculture sector performance looked impressive as far as estimates ofKkharif crops are concerned.
This pick-up is evident from an increase of 71.2% in car sales during 1HFY22 to 114,765 units in comparison with the same period of last year, sales of high-speed diesel (HSD) hit an almost four-year high at 0.84 million tons in October, and electricity consumption rose by 13% during 1QFY22.
Credit to private sector reached its highest ever level. Despite monetary tightening, auto financing is up by 34%, credit card spending is up by 26%, housing finance by 72% and personal loans by 72% in January 2022 over January 2021 which reflects immense demand pressures in the economy.
Google mobility index shows 50 percent increase in mobility across Pakistan over the baseline (pre-Covid), which means that economic activity is likely to be even higher than pre-Covid level. SECP registered companies posted highest ever increase in profitability in almost a decade during 1QFY22 and new registered companies grew by 44% in 1QFY22.
The report said the broad-based improvement in economic performance is indicative of building on the V-shaped growth recovery achieved during FY21. However, the tenuous spillover between growth acceleration and the external sector vulnerabilities once again surfaced during 1HFY22. APP
