KARACHI, June 9, 2023 (AFP). According to a key government report released on Thursday, Pakistan failed to meet any economic growth targets for the fiscal year 2022-2023 – a day before the new budget is due to be presented to the National Assembly.
GDP growth was a miserable 0.3 percent, while agriculture, manufacturing and exports fell short of their targets.
Pakistan’s economy has been hit by a balance of payments crisis as the country struggles to service high levels of external debt as months of political turmoil scare away potential foreign investment.
Inflation has skyrocketed, the rupee has plummeted, and the country can no longer afford imports, leading to a severe downturn in the industry.
The country was also hit by record-breaking monsoonal floods last year that left almost a third of its territory under water, devastating vast swaths of farmland and leaving tens of millions homeless.
Pakistan’s position in the world economic ranking of countries has fallen from 24th place in 2017 to 47th today, Finance Minister Ishak Dar said at a briefing, publishing the results of the survey.
“That says it all,” he said.
The gloomy data leaves the cash-strapped government little room to include populist vote-getting measures in Friday’s budget ahead of elections due in October.
The government is also under huge pressure from the International Monetary Fund (IMF) to squeeze the wallet to unlock another last tranche of a vital aid package.
Under the terms of the IMF, Pakistan was to withdraw subsidies to the energy and other sectors, allow the rupee to float against the US dollar, increase taxes and duties, and restrict imports.
“It was extremely difficult for the government to implement such rigorous reforms, and we had political costs,” Dar said.
“For now, we have averted an impending default.”
Pakistan’s key economic indicators for the year ended June 30, 2023 show that economic growth slowed to 0.29 percent from 6.1 percent a year earlier.
Agriculture, a key driver of the economy, grew by just 1.55 percent, while the industrial sector posted a negative growth of 2.94 percent.
“It was a year of force majeure,” said Ahsan Iqbal, Pakistan’s planning minister, adding that the flooding had a key impact.
Pakistan is expected to set a growth target of 3.5 percent for the coming fiscal year, to be announced in the national budget on Friday.
The World Bank set a less ambitious target of two percent in its latest World Economic Outlook report released earlier this week.