The fiscal year 2023-24 has been a period of notable economic activity in Pakistan. Despite facing significant challenges, the country has demonstrated resilience and adaptability in various sectors. With upward revisions in the growth rates for the first two quarters and a consistent performance in the third quarter, the economic landscape is marked by both progress and setbacks.

With an upswing in per capita income reaching $1,680, Pakistan’s tentative growth rate has shifted positively, landing at 2.38 percent for the fiscal year 2023-24, largely propelled by the agrarian sector. Though the administration fell short of its annual GDP growth aspiration of 3.5 percent, it did surpass forecasts set by international lenders, including the IMF and the World Bank. Wheat yield surged to an unprecedented 31.4 million tonnes, while cotton production escalated beyond 10.22 million bales in this fiscal period. Conversely, the utilities sector, encompassing electricity, gas, and water supply, experienced a contraction of 10.55 percent.

Despite reversing the growth trajectory from negative to positive, the 2.38 percent increment remains insufficient to significantly mitigate poverty and unemployment. The per capita income in dollar terms climbed to $1,680 this fiscal year, up from $1,568 the previous year. The National Accounts Committee (NAC) convened its 109th session under the aegis of the Planning Ministry’s secretary, where they provisionally pegged the GDP growth rate for FY 2023-24 at 2.38 percent. The definitive and adjusted growth rates for FY 2021-22 and FY 2022-23 were 6.18 percent and -0.21 percent, respectively. The agrarian domain witnessed a provisional growth of 6.25 percent, while the industrial and services sectors each expanded by 1.21 percent.

Agricultural growth was largely attributed to substantial increases in key crops, with wheat output rising 11.64 percent to 31.44 million tonnes, cotton production surging 108.22 percent to 10.22 million bales, and rice production climbing 34.78 percent to 9.87 million tonnes. In contrast, sugarcane yield declined by 0.39 percent to 87.64 million tonnes, and maize production diminished by 10.35 percent to 9.85 million tonnes.

Additional notable statistics within the agricultural sector include a 0.90 percent increase in other crops, a 47.23 percent boost in cotton ginning and miscellaneous components, a 3.89 percent uptick in livestock, and a 3.05 percent growth in forestry.

The industrial sector experienced a provisional growth of 1.21 percent. The mining and quarrying industries expanded by 4.85 percent, spurred by increments in crude oil production (1.51 percent), coal (37.72 percent), and other minerals (7.57 percent), such as limestone (7.95 percent) and marble (23.22 percent). Large-scale manufacturing exhibited a marginal growth of 0.07 percent, with varied trends across different groups. The electricity, gas, and water supply sectors contracted by 10.55 percent due to reduced real-term subsidies.

The construction industry advanced by 5.86 percent, driven by heightened construction-related expenditures by both private and public sector entities. The services sector also displayed a growth of 1.21 percent in 2023-24. Wholesale and retail trade increased by 0.32 percent, buoyed by positive agricultural output. The transport and storage industry ascended by 1.19 percent, driven by growth in railways, water transport, and road transport.

High inflation resulted in negative real growth in the Information and Communication (-3.02 percent), Finance and Insurance (-9.64 percent), and Public Administration and Social Security (-5.25 percent) sectors. Nonetheless, the education, human health, and social work industries recorded positive growth rates of 10.30 percent and 6.80 percent, respectively. Other private services were estimated to grow by 3.58 percent.

The NAC sanctioned the third quarter (Jan-March) and annual projections for the fiscal year 2023-24. The economy experienced upward revisions in Q1 (July-Sept) and Q2 (Oct-Dec) for 2023-24, with growth rates of 2.71 percent and 1.79 percent, compared to the previously reported 2.50 percent and 1.0 percent in the 108th NAC meeting. The GDP for Q3 (Jan-March) 2023-24 exhibited a growth rate of 2.09 percent.

The final and amended growth rates for FY 2021-22 and FY 2022-23 stood at 6.18 percent and -0.21 percent, respectively. The committee ratified the revised first and second quarter estimates for 2023-24, with overall GDP growth for Q1 and Q2 adjusted to 2.71 percent and 1.79 percent, respectively, compared to the earlier estimates of 2.50 percent and 1.0 percent.

Agricultural growth during Q1 remained steady at 8.59 percent versus the earlier 8.58 percent, while Q2 saw an improvement from 5.02 percent to 5.83 percent due to upward adjustments in key and other crops. Despite a notable enhancement in mining and quarrying from 7.78 percent to 15.46 percent, industrial activities were downgraded from -0.24 percent to -2.44 percent due to a decline in electricity, gas, and water supply.

However, Q2 industrial activities saw an upward revision from -0.84 percent to 0.09 percent, attributed to positive shifts in mining quarrying and construction, despite downgrades in large-scale manufacturing and utilities.

Growth in services during Q1 and Q2 improved from 0.92 percent and 0.01 percent to 2.02 percent and 0.75 percent, respectively, owing to advances in information and communication, public administration and social security, education, and human health and social work sectors.

The economy posted a consistent growth of 2.09 percent during Q3 of FY 2023-24, with agriculture, industry, and services growing at 3.94 percent, 3.84 percent, and 0.83 percent, respectively. During Q3, all agricultural components contributed positively. Despite negative growth in the construction sector (-15.75 percent), industrial growth of 3.84 percent was driven by mining and quarrying, large-scale manufacturing, and utilities.

Overall growth in services was positive (0.83 percent) during Q3 2023-24, with a mixed trend among its elements. The committee endorsed the overall final growth of annual GDP for FY 2021-22 at 6.18 percent, a slight revision from 6.17 percent in the 107th meeting.

The final growth rates in agriculture, industry, and services for FY 2021-22 were 4.21 percent, 7.01 percent, and 6.69 percent, respectively. The revised growth for FY 2022-23 was -0.21 percent, a slight revision from -0.17 percent. The revised estimates showed an improvement in agriculture from 2.25 percent to 2.27 percent, stability in industry, and a slight decline in services due to downgrades in education, human health, and social work sectors.

The World Bank anticipated economic activity in the country to “remain subdued,” projecting a GDP growth of 1.8 percent in the current fiscal year. “Pakistan is expected to continue facing foreign exchange liquidity issues due to the persistent trade deficit and limited access to external financing,” stated the World Bank’s latest report titled “Pakistan Development Update: Fiscal Impact of Federal State-Owned Enterprises.”

“Even with the recent successful completion of the International Monetary Fund (IMF)’s Stand-By Arrangement (SBA) and continued rollovers, reserves are projected to remain low,” the report added. The Bank cautioned that import management measures were expected to continue disrupting the domestic supply chain, alongside stringent macroeconomic policies curtailing aggregate consumption and investment. “In the absence of a credible and ambitious economic reform agenda, uncertainty is expected to persist, affecting confidence and growth,” the report concluded. “Economic activity is thus projected to remain subdued with real GDP expected to grow at 1.8 percent in fiscal year (FY) 2024.”

The fiscal year 2023-24 encapsulates a complex economic narrative for Pakistan. While certain sectors, particularly agriculture, have shown remarkable growth, others like utilities and construction have struggled. The upward revisions in GDP growth rates for the initial quarters signal cautious optimism, yet the overall picture remains mixed with significant challenges ahead. The World Bank’s projections and the ongoing issues with foreign exchange liquidity highlight the need for robust economic reforms and strategic planning. As Pakistan navigates through these economic waters, sustained growth and stability will depend on addressing structural issues and fostering a more conducive environment for investment and development.