Revenue, GDP growth targets missed

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ISLAMABAD: Finance Minister Ishaq Dar will launch on Monday the Pakistan Economic Survey 2013-14, which is expected to be a mixed bag of missed targets and improved performance in various sectors.

The three-time finance minister would, however, like to play up the ‘better than last year’s performance’ aspect and will be looking to build on hopes for ‘beginning economic revival’ going forward.

While announcing the budget last year, the government had set itself an economic growth target — as measured by gross domestic product (GDP) — of 4.4 per cent for FY2013-14 on the basis of 3.8pc growth in agriculture, 4.8pc improvement in the industrial sector and a 4.6pc rise in the services sector.

The GDP growth rate target was missed as it improved by 4.14pc instead of 4.4pc. It was, however, higher than the 3.7pc growth posted in FY 2012-13, the last year of the PPP’s tenure.

Economic Survey 2013-14 — industrial sector one of few success stories

Except for industry, which exceeded its target for this year, the two other major sectors — agriculture and services — not only missed their targets but effectively pulled down the economic growth rate.

The main contribution came from the manufacturing sector, which posted a growth rate of 5.5pc against a target of 4.5pc and an output of 3.7pc in FY2012-13. Large-scale manufacturing contributed significantly to this with a growth rate of 5.3pc, against a target of 4pc and the FY2012-13 figure of 2.8pc.

On the other hand, the agriculture sector grew by a mere 2.12pc — far below its target of 3.8pc and even lower than the growth rate of 2.9pc posted in FY2012-13. This was despite the fact that the sector showed mixed trends with crops growing by 3.7pc this year as against 1.2pc in FY2012-13.

The performance of other crops (potato, tomato, fruits and onion etc), as per the economic survey, was below par as it recorded negative growth of 3.5 per cent, a significant deceleration from the impressive 6.1 per cent recorded in FY2012-13.

The services sector grew by 4.29 per cent against a target of 4.5 per cent. The current performance was not even as good as the FY2012-13 figure of 4.86 per cent.

The government has also missed its target for the investment-to-GDP ratio. Against a target of 15.1 per cent, the ratio actually stood at 14 per cent this year, below even the 14.6 per cent ratio achieved in FY2012-13. Both domestic and foreign direct investment contributed to this downward movement, according to official papers.

National savings were expected to grow by 14 per cent during the current fiscal year but ended up at 12.9 per cent, lower than last year’s 13.5 per cent national savings-to-GDP ratio.

On the fiscal front, even though the government was able to contain the fiscal deficit below target, it failed to achieve its tax collection target by a large margin. Inflation stood at 8.5 per cent against a target of 8 per cent and 7.5 per cent from FY2012-13.

Published in Dawn, June 2nd, 2014

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