Daily Times

Owing to multiple external and domestic challenges, the country’s economy has been estimated to witness growth of 0.29 percent (provisionally) during the Fiscal Year 2023, finance ministry said here Tuesday.

“Pakistan economy experienced 0.29 percent provisional GDP growth in the FY 2023 on account of many challenges emanating from uncertain external and domestic economic environment,” says Monthly Economic Update and Outlook for May 2023 released by the ministry here. The report says, these challenges triggered Consumer Price Index (CPI) based inflation to remain on a higher trajectory despite monetary tightening primarily due to Pak Rupee depreciation adding the external payments also remained burdened due to lesser foreign exchange inflows.

However, fiscal consolidation, adopted by the government during the outgoing year, supported the economic sustainability. It says, rehabilitation of agriculture activities during Kharif season will also have positive effect on the economic growth. “Overall, the appropriate policy-mix is expected to bring prosperity, economic growth, and improved supply chain,” says the monthly report.

The report says, the final GDP growth rate for FY 2021 has been estimated at 5.77 percent, from the earlier revised estimate of 5.74 percent whereas the revised growth rate of GDP for FY 2022 is 6.10 percent which was provisionally estimated at 5.97 percent. The growth of the agricultural sector has been estimated at 1.55 percent for FY2023, it says adding the growth in important crops witnessed a decline of 3.20 percent due to a decrease in the production of cotton by 41 percent.

However, positive growth has been recorded in the production of wheat by 5.4 percent while other crops have posted a modest growth of 0.23 percent. During Jul-Apr FY2023, the agriculture credit disbursement increased by 25.4 percent to Rs 1,327.8 billion compared to Rs 1,058.7 billion last year.

Large Scale Manufacturing (LSM) witnessed a contraction of 8.1 percent during the period of Jul-Mar Fy2023 owing to various factors such as supply chain disruptions, inflationary pressures, and resultant hike in input prices and continued contractionary policy stance at the domestic level to correct the macro imbalances. CPI inflation recorded at 36.4 percent on a year-on-year basis in April 2023 as compared to an increase of 35.4 percent in the previous month. Month-on-month basis, it increased to 2.4 percent in April as compared to an increase of 3.7 percent in the previous month.

Total revenues increased by 18.1 percent (Rs.6,938.2 billion) during Jul-Mar FY2023, compared to 17.7 percent (Rs.5,874.2 billion) the previous year. Total expenditure grew by 18.7 percent (Rs.10,016.9) billion in Jul-Mar FY2023 against the growth of 27.0 percent (Rs.8,439.8 billion) in the same period of last year. Current expenditures increased by 25.3 percent during July-March FY2023 primarily due to a 69.1 percent growth in markup payments.

The Current Account posted a deficit of $ 3.3 billion for Jul-Apr FY2023 as against a deficit of $ 13.7 billion last year, mainly due to contraction in imports. In Jul-Apr FY2023, workers’ remittances were recorded at $ 22.7 billion ($ 26.1 billion last year), decreased by 13.0 %. Pakistan’s total liquid foreign exchange reserves increased to $ 9.5 billion on May 26, 2023, with the SBP’s reserves stood at $ 4.1 billion. Commercial banks’ reserves remained at $ 5.4 billion. Foreign Direct Investment (FDI) reached $ 1170.1 million during Jul-Apr FY2023 ($ 1523.7 million last year) decreasing by 23.2 percent.