Islamabad, June 9, 2023: The Pakistani government has set a target of 3.5 percent GDP growth for the fiscal year 2023-24, according to sources at the Ministry of Planning, Development, and Special Initiatives.
This projection reflects an improvement compared to the growth of 0.9 percent witnessed in the outgoing fiscal year.
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The fiscal year 2022-23 presented a challenging economic environment, characterized by a slowdown in the economy due to factors such as devastating floods, external sector vulnerabilities, high interest rates, contraction in large-scale manufacturing, modest export growth, and revenue shortfalls.
During the same period, the real GDP recorded a marginal growth of 0.3 percent, falling short of the targeted 5 percent growth. The agriculture sector experienced a growth of 1.5 percent, while the industrial sector contracted by 2.9 percent. The services sector exhibited a modest growth of 0.9 percent, against respective growth targets of 3.9 percent, 5.9 percent, and 5.1 percent. In nominal terms, per capita income increased from Rs. 313,337 to Rs. 388,755 per annum.
The high interest rates had a negative impact on the investment-to-GDP ratio, which declined from 15.7 percent to 13.6 percent. Both public and private investment-to-GDP ratios decreased. However, national savings increased from 11.1 percent of GDP to 12.5 percent, primarily due to lower availability of foreign savings resulting from a significant improvement in the current account deficit.
The fiscal year 2023-24 is expected to be challenging, and the revival of growth will depend on political and macroeconomic stability, improvements in the external account, supportive monetary and fiscal policies, and an anticipated fall in global oil and commodity prices. The overall economic growth projection for 2023-24 is set at 3.5 percent, with expected contributions from the agriculture sector (3.5 percent), industrial sector (3.4 percent), and services sector (3.6 percent).
As the government outlines its growth targets, it will be crucial to implement effective policies and reforms to stimulate investment, boost productivity, and address the challenges faced by various sectors of the economy. A conducive environment for business and investments, along with sustained efforts to improve economic indicators, will be essential in achieving the targeted GDP growth for the fiscal year 2023-24.
