Pakistan GDP Growth at 2.5% in FY24 Amid Industrial Challenges

Pakistan's economy has recently shown a growth of 2.52% during the fiscal year 2023-24. However, this growth has fallen short of the expected target of 3.5%. The primary reason for this shortfall is a significant decline in industrial output, as reported by the Pakistan Bureau of Statistics (PBS). The National Accounts Committee (NAC) has approved these revised figures during its 110th meeting, which included adjustments for both FY23 and FY24.

Despite the overall growth being lower than anticipated, there were some positive developments. The agricultural sector performed well, achieving a growth rate of 6.36%. This growth was largely driven by a remarkable 17.02% increase in major crops, especially wheat, which saw its production rise from 31.438 million tonnes to 31.583 million tonnes. Additionally, the livestock sector also showed improvement due to lower input costs, and cotton ginning experienced a significant recovery, growing by 47.23% compared to the previous year's contraction of 22.84%.

On the flip side, the industrial sector faced challenges, with production shrinking by 1.15%. This decline was particularly evident in sectors such as mining, quarrying, and the supply of electricity, gas, and water. The fall in electricity, gas, and water supply was alarming, accelerating to 23.05% due to reduced output from major suppliers like Wapda, K-Electric, and SNGPL. However, large-scale manufacturing saw a slight improvement, growing by 0.91%, thanks to increased output in food, apparel, and petroleum products.

The services sector also contributed positively, growing by 2.15%. This growth was supported by improvements in wholesale and retail trade, transportation, and communication. While some areas like finance, insurance, public administration, and education faced declines, the overall performance of the services sector helped to offset these losses.

The NAC has also revised the quarterly GDP growth rates for FY24, with Q1 now at 2.69%, Q2 at 1.97%, Q3 at 2.36%, and Q4 showing a growth of 3.07%. Furthermore, the committee updated the growth rates for FY23, which were revised to -0.22%, slightly lower than the previously approved -0.21%.

Looking ahead, the Asian Development Bank has projected a growth rate of 2.4% for FY24, with expectations of improvement to 2.8% in FY25. The NAC has emphasized that these updated growth rates reflect changes in annual benchmarks across various sectors. While the industrial sector's underperformance, particularly in mining and utilities, continues to weigh on the economy, the improvements in agriculture and certain service industries provide much-needed support to overall GDP growth.

While Pakistan's economy has shown some resilience with growth in agriculture and services, the industrial sector's struggles highlight the need for strategic reforms. Addressing these challenges will be crucial for achieving sustainable economic growth in the future. As the country navigates these economic waters, it is essential for policymakers to focus on enhancing industrial productivity and diversifying the economy to ensure a more balanced and robust growth trajectory.