Economy to contract by 0.38pc in FY2019-20

Economy to contract by 0.38pc in FY2019-20

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Islamabad: The government estimated on Monday that the country ’s gross domestic product (GDP) will remain negative at 0.38% in the 2019-20 fiscal year.

According to the estimated growth of agriculture, industry and service industry are 2.67%, -2.64% and 0.59% respectively, the temporary GDP growth in 2019-20 is estimated to be -0.38%.

Under the auspices of the Minister of Planning, Development and Special Initiatives, the 102nd meeting of the National Accounts Committee was held to review GDP.

Compared with complete lock-in, the wise lock-in policy adopted by the government will minimize the impact on economic growth.

According to the agricultural, industrial and service industry growth estimates of 2.67%, -2.64% and 0.59% respectively, the temporary GDP growth in 2019-20 is estimated to be -0.38%. These sectors are briefly discussed below.

The agricultural sector grew by 2.67%. The growth rate of important crops this year is 2.90%.

The reason for the increase is that the production of wheat, rice and corn increased by 2.45%, 2.89% and 6.01% respectively. However, cotton and sugarcane crops showed negative growth of 6.92% and 0.44%, respectively.

The positive growth of other crops (onions, potatoes, vegetables, etc.) was 4.57%, mainly due to increased production of beans, oil seeds and vegetables.

The livestock industry grew by 2.58%, which runs counter to historical growth, mainly due to the reduced demand for dairy products and poultry. Due to increased wood production, forestry increased by 2.29%.

The entire industrial sector experienced a negative growth of 2.64%, mainly due to the shutdown of the relevant industrial sector of COVID-19. The added value of the mining and quarrying industry fell by 8.82%.

The large-scale manufacturing (LSM) industry was mainly driven by QIM data (July 2019 to March 2020), a decrease of 7.78%.

Textiles (-2.57%), food, beverages and tobacco (-2.33%), coke and petroleum products (-17.46%), pharmaceuticals (-5.38%), chemicals (-2.30%), automobiles (–36.5%) , Steel products (-7.96%), electronic products (-13.54%), engineering products (-7.05%) and wood products (-22.11%).

The main positive growth of LSM occurred in fertilizers (5.81%), leather products (4.96%), rubber products (4.31%) and paper and cardboard (4.23%). The power and natural gas sub-industry grew by 17.70%, mainly due to higher subsidies and better added value of WAPDA & Companies. Construction activities increased by 8.06%, mainly due to the increase in general government spending.

Globally, shrinking service delivery in major industries related to Covid-19 has the greatest impact on the service industry. For many years, Pakistan ’s service industry has been the main growth driver, and its provisional estimates have rarely contracted by 0.59%.

The wholesale and retail trade sectors contracted by 3.42%, while the transportation, warehousing and communications sectors recorded a negative growth of 7.13%. The financial and insurance industries rose slightly by 0.79%.

The rest of the services, namely housing, general government and other private services, achieved positive growth of 4.02%, 3.92% and 5.39% respectively.

The GDP calculated at current market prices is also calculated. The GDP for the 2019-20 fiscal year was Rs 417,270 crore. This represents an increase of 9.9% compared with Rs 37,972 crore in the 2018-19 fiscal year.

The calculated per capita income for 2019-20 is 214,539 rupees, an increase of 8.3% from 2019 rupees. It was 198,028 in 2018-19.

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