Islamabad, June 8, 2023: According to Finance Minister Ishaq Dar, Pakistan’s Gross Domestic Product (GDP) achieved a meager growth of only 0.29 percent during the fiscal year 2022-2023. This announcement was made during the unveiling of the Pakistan Economic Survey 2022-23 at a press conference.
The finance minister attributed the low growth to severe macroeconomic imbalances, flood damages, domestic supply shocks, and an international economic slowdown that hampered economic progress throughout FY2023.
Initially, following the budget announcement in June 2022, the government had projected a GDP growth rate of approximately 5.0 percent for FY2023 based on positive economic expectations and the performance of key indicators.
However, the economy lost momentum in the first quarter of the fiscal year due to a global economic downturn and the impact of flash floods in July-August 2022, resulting in significant disruptions to domestic supply chains.
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The survey estimates the flood damage at Rs 3.2 trillion (US$14.9 billion), with a loss to GDP amounting to Rs 3.3 trillion (US$15.2 billion), and a recorded need for rehabilitation and damages reaching Rs 3.5 trillion (US$16.3 billion). On the international front, the prolonged Russia-Ukraine conflict adversely affected global growth, while inflation remained unexpectedly high.
In FY2023, Pakistan’s GDP grew by a mere 0.29 percent, with the agriculture sector showing a growth of 1.55 percent, the industrial sector experiencing a contraction of -2.94 percent, and the services sector achieving a modest growth of 0.86 percent.
The GDP at current market prices recorded Rs 84,658 billion, reflecting a 27.10 percent increase compared to the previous year’s Rs 66,624 billion (US$ 341 billion). However, the per capita income decreased from US$ 1765 to US$ 1568 in FY2023, which was attributed to the significant depreciation of the Pakistani Rupee (PKR) and the overall contraction in economic activity.
Regarding investment, the Investment-to-GDP ratio stood at 13.6 percent in FY2023, a decrease from 15.6 percent in FY2022. Gross Fixed Capital Formation (GFCF) estimates reached Rs 10,093.5 billion, showing an increase of 8.1 percent compared to FY2022.
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The industry-wise disaggregation of GFCF by the general government indicated increases of 17.7 percent, 89.2 percent, and 5.9 percent in public administration & social security, education, and human health & social work, respectively.
The Pakistan Economic Survey 2022-23 portrays a challenging year for the country’s economy, with minimal GDP growth and significant hurdles caused by macroeconomic imbalances, flood damages, and international economic pressures.
The survey provides valuable insights into the economic landscape and serves as a foundation for policymakers to address the challenges and implement necessary reforms for sustainable economic growth.
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