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01 Growth
01 Growth
Introduction
Pakistans economy has maintained higher and
broad based economic growth in outgoing fiscal
year 2014-15 despite a number of internal and
external challenges. Government remained
focused on the agenda aimed at reviving of the
economy, resolving the energy crisis, improving
security situation, and providing ample
opportunities to all and sundry to boost up their
socio-economic condition. Government has
pursued growth oriented economic policies and
introduced comprehensive structural reforms to
achieve these objectives. Due to continuous
efforts, the situation started improving as key
economic indicators showing positive signals
for economic agents. During first year, the
government succeeded in averting fear of
default in foreign exchange reserves and in
second year achieved macroeconomic stability.
The major economic achievement includes:
picking up in economic growth, inflation
contained at 4.8 percent during July-April 2015,
which is lowest level of inflation since 2003.
Government of Pakistan has also succeeded to
pass on more benefits of decline in international
oil prices to general public as compared to other
regional countries, which has provided a relief
to the common man, remarkable improvement
in workers remittances, build foreign exchange
reserve buffer well around four months of
imports, successful launching of Euro Bond and
Sukuk Bond after 9 years, improvement in tax
collection, containment of fiscal deficit, stock
market created new history, and launching of
Pak-China Economic Corridor which will create
new history in economic development of the
country.
During fiscal year 2014-15 economic
environment in the country remained confronted
with number of challenges such as war against
5.54
4.99
5
4
3.62
3.84
4.03
4.24
3.65
2.58
2
1
0.36
0
2006-07
2007-08
2008-09
2009-10
2010-11
2011-12
2012-13
2013-14
2014-15
4.7
-1.5
-2.3
1.1
6.4
7.4
7.8
7.6
6.2
5.2
0.1
3.7
2.6
0.6
1.9
6.8
7.8
1.7
2.3
3.4
5.2
ASEAN
6.0
5.6
6.5
6.8
2013
3.4
-0.5
2.2
1.6
0.2
2.0
7.0
7.8
2.9
3.0
4.4
5.4
5.6
4.7
2.9
7.2
2014
3.4
0.9
2.4
-0.1
1.6
2.5
6.8
7.4
2.3
3.3
2.9
6.0
5.0
6.0
0.7
6.1
2015
2016(P)
3.5
3.8
1.5
1.6
3.1
3.1
1.0
1.2
1.6
1.7
2.2
2.0
6.6
6.4
6.8
6.3
2.8
3.1
3.3
3.5
3.0
3.0
6.0
5.8
5.2
4.8
3.7
6.7
5.5
4.9
4.0
6.3
2014
2015
2016(P)
7.2
6.1
7.4
4.0
7.5
6.3
6.5
4.2
7.5
6.8
6.5
5.5
3.6
1.3
3.0
2.2
3.0
1.7
2.7
1.8
1.3
4.3
4.1
2.9
2.3
6.3
5.3
1.5
0.6
4.0
2.6
4.4
3.0
4.8
6.9
2.0
3.9
5.0
3.8
5.0
7.2
2.1
divided
into
mining
and
quarrying,
manufacturing (large scale, small scale &
slaughtering),
electricity
generation
&
distribution, gas distribution and construction.
Services sector is divided into wholesale and
retail trade, transport, storage & communication,
finance and insurance, housing services, general
government services and other private services.
It is very important to study the performance of
various sectors and subsectors of GDP to
differentiate what is happening in various sub
sectors and on the overall economic growth. The
sectoral analysis provides useful understanding
about performance of the economy as a whole
as well as various segment of the economy and
also identifies how various sectors are
interrelated with each other and contribute in
growth of the economy. The sectoral growth
performance of GDP is presented below in
Table-1.2.
Forestry,
0.64 %
Forestry,
2.08 %
Livestock,
32.84 %
Crops,
39.63 %
Crops,
63.04 %
Livestock,
56.31 %
Industrial Sector
Industrial sector play a significant role in
uplifting the economy and to improve socioeconomic condition of the people due to its
multi-dimensional direct and indirect linkages,
which spillovers benefits to non-industrial
sectors of the economy. Industrial sector on one
hand creates demand for agriculture produce by
using it as raw materials and on the other hand
provides latest machineries and equipments to
modernize crop cultivation process and provides
room to reinvest surplus and absorb surplus
labor from the economy. Industrial sector also
creates demand for various types of services and
also provides appliances and other equipments
10
11
Electricity and
Gas
Distribution
15.69 %
Mining &
Quarrying
1.87 %
Mining &
Quarrying
14.40 %
Construction
12.00 %
Construction
14.49 %
Manufacturing
67.96 %
Services Sector:
The services sector has been growing at a much
faster rate than commodity producing sector of
the economy for quite some times. It has
maintained the same trend in fiscal year 2014-15
and grew at 4.95 percent against the commodity
producing sector growth of 3.24 percent.
Services sector has emerged as the most
significant driver of economic growth and
contributing a major role in augmenting and
sustaining economic growth in Pakistan. The
contribution of the services sector has increased
from 56.0 percent of GDP in 2008-09 to 58.8
percent in 2014-15. This sector of the economy
has a enormous potential to grow at much
higher rate and government is trying to tap this
potential by providing an enabling environment.
Services sector contains six sub-sectors
including:
Transport,
Storage
and
Communication; Wholesale and Retail Trade;
Finance and Insurance; Housing Services
(Ownership of Dwellings); General Government
Services (Public Administration and Defense);
and Other Private Services (Social Services).
Manufacturing
65.37 %
12
13
2011-12
0.79
0.54
0.28
2.51
3.84
2012-13
0.58
0.13
0.61
2.95
3.65
2013-14
0.58
0.91
0.60
2.54
4.03
(% Points)
2014-15 P
0.61
0.74
0.43
2.89
4.24
10
(%)
8
6
4
2
0
-2
2007-08
2008-09
2009-10
2010-11
2011-12
2012-13
2013-14
2014-15
14
GDP MP
Net Exports [X-M]
Total Investment [I]
Total Consumption [C]
GDP MP
10
8
(%)
6
4
2
0
-2
-4
2007-08
2008-09
2009-10
2010-11
2011-12
2012-13
2013-14
2014-15
15
5.4
5.8
5.4
5.3
5.5
5.4
5.6
5.3
Other Crops
3.2
3.3
2.9
2.9
2.6
2.6
2.4
2.3
Cotton Ginning
0.7
0.7
0.7
0.6
0.7
0.6
0.6
0.6
11.6
11.8
11.9
11.9
11.9
11.9
11.8
11.8
3. Forestry
0.5
0.5
0.5
0.5
0.5
0.5
0.4
0.4
4. Fishing
0.6
0.6
0.6
0.5
0.5
0.4
0.4
0.4
B. Industrial Sector
1. Mining & Quarrying
22.1
3.3
20.9
3.2
21.0
3.2
21.2
3.0
21.0
3.0
20.3
3.0
20.4
2.9
20.3
2.9
2. Manufacturing
14.4
13.8
13.6
13.4
13.2
13.4
13.4
13.3
-Large Scale
12.3
11.5
11.3
11.0
10.8
10.8
10.8
10.6
-Small Scale
1.2
1.3
1.4
1.5
1.5
1.6
1.7
1.7
-Slaughtering
0.9
0.9
0.9
0.9
0.9
0.9
0.9
0.9
3. Electricity Generation
& Distribution & Gas
Distt
4. Construction
1.5
1.3
1.5
2.4
2.4
1.7
1.7
1.7
2.8
2.5
2.7
2.4
2.4
2.3
2.4
2.4
C. Services Sector
56.0
56.6
56.9
57.1
57.4
58.2
58.4
58.8
19.9
19.3
19.1
18.8
18.4
18.4
18.4
18.3
12.7
13.3
13.3
13.1
13.2
13.3
13.4
13.4
3.8
3.5
3.3
3.0
2.9
3.1
3.1
3.1
4.Housing Services
(Ownership of Dwellings
5. General Government
Services
6. Other Private Services
6.4
6.6
6.7
6.7
6.7
6.8
6.8
6.8
5.1
5.4
5.7
6.2
6.7
7.2
7.1
7.4
8.1
8.6
8.9
9.1
9.4
9.5
9.7
9.9
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100
2. Livestock
GDP (fc)
16
Other Services,
24.06%
Agriculture,
24.58%
Finance &
Insurance,
3.04%
Large Scale
Manufacturing,
10.62%
Finance &
Insurance,
3.14%
Transport,
Storage &
Communication
7.99%
Large Scale
Manufacturing,
12.37%
Transport,
Storage &
Communication,
13.36%
Other Industrial
Sector,
14.83%
Other Industrial
Sector,
9.68%
Whole Sale &
Retail Trade,
18.26%
1512
1400
1274
1200
1000
1053
1026
2007-08
2008-09
980
1320
1333
2011-12
2012-13
1384
1072
900
800
600
400
200
0
2005-06
2006-07
2009-10
2010-11
2013-14
2014-15
17
18
Total Investment
19.21
17.55
15.80
14.11
15.08
14.96
14.98
15.12
1.6
1.6
1.6
1.6
1.6
1.6
1.6
1.6
17.61
15.9
14.20
12.51
13.48
13.36
13.38
13.52
-Public Investment
4.8
4.3
3.7
3.2
3.75
3.52
3.36
3.86
-Private Investment
12.8
11.7
10.5
9.3
9.73
9.84
10.03
9.66
Foreign Savings
8.16
5.51
2.22
-0.10
2.07
1.08
1.28
0.60
National Savings
11.0
12.0
13.6
14.2
13.00
13.9
13.7
14.5
Domestic Savings
9.1
9.4
9.8
9.7
7.84
8.7
8.0
8.4
Changes in Stock
Gross Fixed Investment
25
20
(%)
15
10
5
0
2007-08
2008-09
2009-10
2010-11
2011-12
2012-13
2013-14
2014-15
19
facilitation
Million US $
1,000.00
900.00
800.00
700.00
600.00
500.00
400.00
300.00
200.00
100.00
0.00
FDI Inflow
Jul-14
Jul-14
113.60
Aug-14
Aug-14
92.00
Sep-14
Sep-14
108.80
Oct-14
Oct-14
938.80
Nov-14
Nov-14
118.10
Dec-14
Dec-14
195.60
Jan-15
Jan-15
85.90
Feb-15
Feb-15
103.50
Mar-15
Mar-15
135.00
Apr-15
Apr-15
166.00
FDI Outflow
95.20
33.90
31.90
690.00
97.50
94.20
69.60
28.60
40.30
51.20
Workers Remittances
Remittances have been recognized as a key
source of external resource inflows for
developing countries, and have surged over the
last few decades. World Bank's Migration and
Remittances report 2015 mentioned that
Remittance flows to developing countries are
estimated to have reached $436 billion in 2014,
an increase of 4.4 percent over a year ago.
Flows to developing countries are projected to
slow down to 0.9 percent growth in 2015, owing
to a weak economic outlook in remittance
source countries in Europe and Russia. Flows
are expected to accelerate in 2016, and to reach
$479 billion by 2017 in line with the more
20
2007-08
2008-09
2009-10
2010-11
2011-12
2012-13
2013-14
2014-15
July-April*
USA
1,762.03
1,735.87
1,771.19
2,068.67
2,334.47
2,186.24
2467.65
2,105.49
U.K.
458.87
605.59
876.38
1,199.67
1,521.10
1,946.01
2180.23
1,845.30
Saudi Arabia
1,251.32
1,559.56
1,917.66
2,670.07
3,687.00
4,104.73
4729.43
4,565.42
U.A.E.
1,090.30
1,688.59
2,038.52
2,597.74 28,48.86
2,750.17
3109.52
3,384.30
Other GCC
Countries
983.39
1,202.65
1,237.86
1,306.18
1,495.00
1,607.88
1860.03
1,751.22
EU Countries
176.64
247.66
252.21
354.76
364.79
357.37
431.85
298.89
812.08
1003.88
935.40
969.26
1059.00
1,019.04
15837.71
14,969.66
Other Countries
Total
728.68
771.51
6,451.24
7,811.43
Source: SBP
* : Provisional
21
other
Countries,
12.78%
USA,
31.04%
EU Countries,
2.44%
4.35%
USA
15.95%
U.K.
14.11%
Other GCC
Countries
12.04%
Other GCC
Countries,
12.29%
U.K.,
8.92%
U.A.E.,
17.09%
EU Countries
2.80%
Saudi Arabia,
15.05%
U.A.E.
20.13%
Saudi Arabia
30.62%