KARACHI: State Bank of Pakistan (SBP) has projected the real GDP growth in fiscal year 2016/2017 to be around 5-6 percent higher than the last fiscal year, which was at 4.7 percent. However, SBP said that the budget deficit will be higher at 4-5 percent, more than the government target of 3.8 percent for the current fiscal year.
The SBP on Friday issued Review on State of Pakistan’s Economy for second quarter (October – December).
The SBP projected Consumer Price Indicator (CPI) at 4-5 percent in the current fiscal year, much lower than the government target of 6 percent.
The inflow of foreign remittances is expected to be around $20.5 billion, which is almost equal to the target set by the government.
However, the SBP projected significant fall in exports to $21.5-22.5 billion against the government projection of $24.7 billion.
The SBP said that the real GDP growth in FY17 is expected to be higher than the last year. “Major contribution is expected from the rebound in agriculture and increased pace of work on infrastructure and energy projects,” the SBP said.
In particular, the completion of early harvest energy projects under CPEC (China Pakistan Economic Corridor) is expected to provide additional boost to industrial growth. “These expectations are in line with continuing robust trends in private sector credit and import of machinery and raw materials,” the central bank said.
The growth in industry, though likely to fall short of its target, is expected to maintain last year’s level. The textile industry, the largest sub-component of the LSM, is expected to post some recovery in Second Half FY17, as exporters cash-flow constraints may ease following the recently announced export package.
The commencement of operations of new power plants and the sustained increase in LNG imports are expected to help electricity generation and gas distribution to maintain last year’s momentum. Similarly, as indicated by strong trends in cement and steel production, the growth in construction sector is likely to remain robust in FY17 as well.
The services sector is expected to achieve its target growth rate for the year. The current trends in trade, especially imports; higher production and sale of commercial vehicles; substantial increase in bank credit; flourishing housing schemes; and rising internet subscription, all suggest a vibrant services sector. Incorporating these developments, the latest projections indicate real GDP growth in the range of 5 to 6 percent in FY17.
