• Industrial contraction affects general growth in July-September
• NAC revises economic expansion downwards to 2.50% for FY24
ISLAMABAD: Pakistan’s economy grew a modest 0.92 percent in the first quarter (July-September) of the current fiscal year, a sharp drop from 2.3 percent recorded in the same period last year.
The PML-N-led coalition government claims the economy is recovering, but first-quarter figures tell a different story compared to the growth recorded during the caretaker regime last year, according to data released by the Accounts Committee. Nationals (CNA) on Monday.
The modest quarterly growth was mainly due to a 1.43 percent increase in the services sector and a 1.15 percent increase in agriculture. However, the industrial sector contracted by 1.03 percent, dragging down overall economic performance.
The NAC revised GDP growth for FY24 slightly downward, from a previous estimate of 2.52 percent to 2.50 percent.
The State Bank of Pakistan (SBP) expects GDP growth to remain in the upper half of the 2.5 to 3.5 percent range for FY25. Similarly, the International Monetary Fund projects economic expansion of 3.2 percent. Recently, the Asian Development Bank also raised its forecast for Pakistan’s GDP growth to 3 percent, up from 2.8 percent.
The 111th meeting of the NAC, chaired by Secretary Planning Commission, took place on Monday at the Pakistan Bureau of Statistics headquarters. The meeting approved the updated annual growth rates for FY23 and FY24 (revised) and the first quarter GDP growth rate for FY25.
A closer analysis of the agricultural sector shows a 5.93 percent contraction in agricultural production during the first quarter. Key crops saw a decline of 11.19 percent, with cotton production declining by 29.6 percent, maize by 15.6 percent, rice by 1.2 percent and sugarcane by 2 .2 percent. Wheat was not affected in the first quarter as it was not planted or harvested during this period.
Meanwhile, other crops grew by 2.08 percent compared to a decline of 2.08 percent in 1QFY24 due to lower use of inputs such as fertilizers and pesticides. Livestock production increased 4.89 percent, up from 4.56 percent last year, driven by higher livestock products and lower input costs. The forestry and fishing industries also saw modest growth of 0.78 percent and 0.82 percent, respectively.
The contraction rate of the industrial sector slowed from 4.43 percent in 1QFY24 to 1.03 percent in 1QFY25. The mining and quarrying industry contracted 6.49 percent, driven by falling production of coal (12.4 percent), gas (6.7 percent) and crude oil (19.8 percent) . The large-scale manufacturing (LSM) sector, measured by the Quantum Index of Manufacturing (QIM), fell 0.82 percent.
However, the electricity, gas and water supply industry saw a modest growth of 0.58 percent. Based on input production, the construction industry decreased by 14.91 percent, mainly due to a 16.12 percent drop in cement production.
Services grew 1.43 per cent in the first quarter of FY25, up from 2.16 per cent in the same month last year. The growth was driven by positive contributions from wholesale and retail trade (0.51 percent), accommodation and food services (4.58 percent), information and communication (5.09 percent), real estate activities (4.22 percent), education (2.03 percent) and human health. and social work activities (5.60pc), and other private services (3.30pc). However, the transportation and storage and public administration and social security sectors contracted by 0.07 percent and 4.49 percent, respectively.
Size of the economy
According to the latest NAC figures, the total size of Pakistan’s economy for 2023-24 is Rs 105.6 trillion ($373.3 billion). The per capita income is 472,263 rupees ($1,669).
The NAC stated that the per capita income series from 2016-17 onwards will be revised after receiving backward and forward population projections based on the 2023 Population Census.
Published in Dawn, December 31, 2024
