LAHORE: The manufacturing sector recorded 17 per cent decline in exports in the first month of newly-started fiscal year 2015-16, which is an alarming situation for the country’s economy.
This was revealed in a fact report issued by the Institute for Policy Reforms (IPR). According to the report, the textile industry is up in revolt after the imposition of taxes and surcharges on electricity and gas. “The rupee remains significantly overvalued and this has impaired the competitiveness of our exports. Similarly, after a long time, remittances are beginning to flatten out, with less than 1% growth in July,” it said.
The report also states that amid perceptions of economic stabilisation and recovery, the National Economic Council (NEC), chaired by the prime minister, has set a number of ambitious targets in the Annual Plan for 2015-16. Realisation of these targets would unambiguously confirm that the economy has finally broken out of the low growth trap.
The GDP growth rate for 2015-16 has been set at 5%. The last time a growth rate of above 5% was achieved was as far back as 2006-07. According to the Annual Plan, the industry is expected to lead the growth process, with a growth rate approaching 6.5%. Inflation is likely to average 6% over the year.
The level of investment is also projected to revive sharply, from about 15% to almost 18% of the GDP. Exports would also pick up, after four years of stagnation, with a growth rate of over 5%. Remittances are expected to continue growing, while foreign direct investment (FDI) is likely to show a quantum jump of doubling over the level in 2014-15.
The focus of public finances continues to be on further stabilisation, with a reduction in the fiscal deficit to 4.3% of the GDP. This is to be achieved by a 20% growth in FBR revenues and little or no growth in current expenditure at the federal level. In addition, the provinces are expected to generate a large combined cash surplus of Rs 300 billion.
