Independent economists forecast below 6% GDP growth

Independent economists forecast below 6% GDP growth

By Fida Hussain

ISLAMABAD: The missed targets of major crops and the lower growth of industrial sector could deprive the country of achieving the desired GDP growth of seven percent, as independent economists are forecasting the real growth something below six percent in the current financial year.

“The government must be jubilant if the GDP growth touches six percent against the last year’s achieved growth of 8.4 percent,” most economists in the private sector are of the view.

They have informed the government that the situation has changed considerably this fiscal, where the estimated cotton crop size could be around 13 million bales against the last year’s achieved production of 14.6 million bales. There is a difference of 1.6 million bales in cotton production this year and what was achieved in the last fiscal, an economist, who asked not to be named, told the Daily Times.

Similarly, the estimated wheat production could be around 20.4 million tons this fiscal against the last fiscal achieved production of 21.6 million tons, thus corresponding a decrease of 1.2 million tons. However, the ministry of food, agriculture and livestock (MINFAL) says that the projection of wheat size has been made on the basis of first estimates. Further estimates are coming in. The actual production of wheat would be known after the third estimates.

The GDP growth in the last fiscal was contributed by a 7.5 percent growth in agriculture, 15.4 percent in large-scale manufacturing (LSM) and 7.9 percent in the services sector. However, this fiscal the low output of cotton, though the second largest crop in the country’s history, has a direct bearing on the GDP growth. “Ours is agro-based economy. I would say that it is a cotton-based economy. The decline in cotton production has definitely a direct bearing on the growth,” said an economist.

This year the growth target for agriculture is 4.8 percent against the last year’s impressive achieved growth of 7.5 percent. If one analyzed the last year’s agricultural growth, it was only the bumper crop of cotton showing an increase of 45 percent over the 2003-04 production, which had pushed up the growth rate to 17.3 percent for major crops. This year the case is different as besides cotton the output of wheat and sugarcane is falling short of the target.

As far as the performance of the industrial sector is concerned, it gives a bleak picture in the current fiscal. The ministry of industries, production and special initiatives and the Federal Bureau of Statistics are giving different figures as far as the production in the LSM sector is concerned. Due to differences in the two, the government confirmed that figures for LSM production stand at less than six percent in the first three months of the current fiscal. Unlike the last fiscal, the Engineering Development Board has literally stopped publishing the LSM figures in its monthly bulletin. Overall, the LSM grew by 12.5 percent in the last fiscal while the growth target for the same in the current fiscal is 11 percent. The National Economic Council has already lowered the growth target for the current fiscal. The Asian Development Bank (ADB) is also of the view that the real growth could be around 6.3-6.5 percent in the current fiscal. However, private sector experts are of the view that the ADB estimates have been made on assumption that the country would achieve a bumper wheat crop this fiscal.