REFERENCE OF THE DOCUMENT FACTS AND FIGURES:

GOVERNMENT OF PAKISTAN FINANCE DIVISION

https://www.finance.gov.pk/survey_2023.html

1. GDP statistics

FY2021 FY2022: FY2023:

GDP growth: 3.94%
Significantly higher growth
compared to the previous two
years (-0.47 and 2.08 percent
in FY2020 and FY2019
respectively), which saw
negative and modest growth,
respectively.
Exceeded the target of 2.1%
for FY2021.
Real GDP growth: 5.97%
A V-shaped economic
recovery, surpassing the
previous year's growth.
The current account deficit
widened significantly, leading
to pressure on exchange
rates.
GDP at the then-current
market prices increased by
20.0% over the previous
year, partly due to the low
base effect.
Per capita income improved
to $1,798, reflecting
increased prosperity.
Real GDP growth: 0.29%
The economy faced
challenges, including
macroeconomic imbalances,
supply shocks, and an
international economic
slowdown.
Floods in the first quarter of
FY2023 disrupted the
agriculture sector and caused
significant economic losses.
An increase in international
prices and currency
depreciation led to higher
domestic commodity prices,
reducing aggregate demand.
A sharp slowdown in the
industrial sector, particularly
manufacturing, contributed to
the overall low GDP growth.
The services sector, which
constitutes a significant share
of GDP, also saw meager
growth

Analysis:
The recent fluctuations in Pakistan's GDP growth, from a robust expansion in FY2022 to a
sharp slowdown in FY2023, reveal the economy's vulnerability to external and internal shocks,
emphasizing the need for stability measures. FY2023's challenges, marked by macroeconomic
imbalances, supply shocks, and global economic slowdown, underscore the importance of
addressing these issues for overall economic health. Natural disasters, like floods, have shown
their potential to disrupt agriculture and result in GDP losses and extensive rehabilitation
expenditures, calling for better disaster preparedness. Exchange rate pressures, income
fluctuations, declining investment, and sluggish growth in the services and industrial sectors
collectively demand comprehensive policy responses for economic resilience and sustainable
development.

2.Fiscal deficit
 2021 2022 2023

The fiscal deficit was The fiscal deficit increased to Fiscal deficit reduced to 4.6%
contained at 3.5 percent of 3.8 percent of GDP of GDP (Rs.3,929.3 billion)
GDP during July-March (Rs.2,565.6 billion) against during Jul-Apr FY2023
against 4.9% of GDP
FY2021 against 4.1 percent 3.0 percent of GDP
(Rs.3,275.2 billion) in the
of GDP in the same period of (Rs.1,652.0 billion) in the same period of last year.
last year. same period of last year. Similarly, the primary balance
The primary balance posted a Similarly, the primary balance posted a surplus of Rs. 99.1
surplus of Rs 451.8 billion posted a deficit of Rs. 447.2 billion against a deficit of Rs.
during July-March, FY2021 billion against the surplus of 890.2 billion during the period
against the surplus of Rs Rs.451.8 billion during the under review, reflecting a
slowdown in the growth of
193.5 billion in same period period under review
non-markup expenditures.
last year.
Analysis:
The fiscal deficit reduction to 4.6% of GDP and the return to a primary surplus of Rs. 99.1 billion
in FY2023 signal improved fiscal discipline and financial management. These trends are
positive indicators for managing the national debt effectively, controlling inflation, and attracting
investors, potentially stimulating economic growth. However, they also pose challenges in
allocating resources for vital public services and development projects, underscoring the need
for a delicate balance between fiscal control and growth-oriented policies to ensure the nation's
economic stability and international financial reputation.

3.REVENUE PERFORMANCE
2022
Total revenues:
Rs. 5,874.2 billion (8.8% of
GDP)
Total tax collection:
Rs. 4,821.9 billion
Non-tax revenues:
Rs. 1,052.2 billion
2023
Total revenues:
Rs. 6,938.2 billion (8.2% of
GDP)
Total tax collection:
Rs. 5,617.7 billion
Non-tax revenues:
Rs. 1,320.5 billion

Analysis:
Notably, in 2023, both tax and non-tax revenues surged, showcasing the government's
adaptability and effectiveness in revenue generation, even amid economic challenges. The
consistent tax growth, despite external headwinds, and the rise in non-tax revenue sources
contribute to economic stability, highlighting the government's commitment to fiscal reforms and
the positive impact on the economy's financial well-being.
Positive revenue trends yet declining economy
The coexistence of positive revenue trends and a declining economy underscores a complex
interplay of fiscal and macroeconomic dynamics. While increased revenue collection reflects the
government's commitment to bolster its financial resources, the economic downturn reveals
deeper-seated challenges that revenue alone cannot overcome. This disconnection suggests
that merely collecting more taxes is insufficient without prudent and effective fiscal
management, strategic allocation of resources, and a comprehensive approach to address
underlying economic issues. The government must not only continue its revenue-enhancing
efforts but also channel these funds wisely into initiatives that promote economic growth, job
creation, and resilience in the face of broader economic challenges, striving to bridge the gap
between fiscal strength and economic well-being.
4.EXPENDITURE

FY2021: FY2022: FY2023:

Total expenditures growth: Total expenditures growth: Total expenditures growth:
4.2 percent 27.0 percent 18.7 percent

Current expenditures growth: Current expenditures growth:

21.2 percent 25.3 percent

Total development Development expenditures

FBR tax collection growth:
14.4 percent
expenditure growth: 54.6
percent
FBR tax collection growth:
28.4 percent
All four provinces posted a
combined surplus of Rs.
599.8 billion
and net lending recorded a
marginal increase of 0.9
percent
FBR tax collection growth:
16.1 percent
All four provinces posted a
combined surplus of Rs.
456.0 billion

Analysis
The increasing current expenditures, particularly due to higher markup payments and a
depreciating Rupee, pose economic challenges. This requires careful management to mitigate
the impact on the fiscal deficit and overall economic stability.
The reduced surplus in 2023 suggests economic challenges or heightened spending demands
that necessitate more cautious financial planning. These fluctuations underline the need for
provinces to adapt their fiscal strategies to changing conditions and emphasize the dynamic
nature of inter-governmental relations and budget management, which collectively influence
fiscal stability and development prospects.

5.BORROWING
Government borrowing for
budgetary support during 1st
July-30th April, FY2021 was
Rs 675.9 billion, a decrease
from Rs 1,171.3 billion in the
same period the previous
year.
In the period 1st July-20th
May, FY2022, government
borrowing for budgetary
support was Rs 1,765.2
billion, significantly higher
than the Rs 473.8 billion
borrowed during the same
period in the previous year.
Government borrowing for
budgetary support increased
further in FY2023, reaching
Rs 3,043.3 billion during the
period 1st July-12th May.
This was a substantial
increase from the Rs 1,570.0
billion borrowed during the
 same period the previous
year.
Analysis:
Government borrowings directly influence fiscal health, as the size and pattern of borrowings
can lead to fiscal deficits and increased debt servicing costs. Effective debt management is
crucial to ensure manageable repayments and avoid financial crises. Prudent borrowing
practices are essential for economic stability, as excessive borrowing, particularly from the
central bank, can trigger inflation, currency depreciation, and other instabilities.

6.INFLATION
SPI recorded an increase of 16.7 percent SPI stood at 32.8% during Jul-May FY2023
during July-May, FY 2022 against the 13.5 against the 16.7% last year.
percent last year

WPI during July-May, FY 2022 has recorded WPI during Jul-May FY2023 has recorded an
an increase of 23.6 percent against the 8.4 increase of 33.9% against the 23.6% last year.
percent the last year

The headline inflation CPI, averaged at 11.3 Headline CPI national inflation, averaged at
percent during July-May, FY 2022 against 8.8 29.2% during Jul-May, FY 2023 against 11.3%
percent in the comparable period last year in the comparable period last year.

The Urban food inflation during July-May, FY
2022, is recorded at 12.5 percent and non-
food 10.2 percent as against 12.6 percent
and 5.4 percent in the corresponding period
last year
Urban food inflation during Jul-May, FY 2023,
is recorded at 37.3% and non-food 20.3% as
against 12.5% and 10.2% in the corresponding
period last year.

Urban and Rural Core inflation and during Urban and Rural Core inflation during Jul-May
July-May, FY 2022, stoodat 7.8 percent and FY2023, stood at 16.0% and 20.1%
8.6 percent respectively against 5.9 percent s respectively against 7.8% and 8.6% last year.
and 7.6 percent the last year

The Rural food inflation during July-May, FY
2022, is recorded at 11.8 percent and non-
food 11.5 percent as against 13.4 percent
and 7.2 percent in the corresponding period
last year
Rural food inflation during Jul-May FY2023, is
recorded at 41.1% and non-food 24.9% as
against 11.8% and 11.5% in the corresponding
period last year.

The sharp increases in inflation from July to May in FY2023, compared to the previous year,
indicate significant inflationary pressures in the economy. This rising inflation, particularly in food
prices, can strain household budgets and dampen consumer spending, potentially affecting
economic growth. Moreover, controlling this inflation might require tighter monetary policies like
higher interest rates, which can impact investments and economic stability. Effective inflation
management and fiscal policies are crucial to address these challenges and maintain economic
stability.
7.TRADE Decline

FY2021 (July-April): FY2022 (July-April): FY2023 (Jul-Apr):

Exports grew by 6.5% to $21
billion.
Imports increased by 13.5%
to $42.3 billion.
Trade deficit increased by
21.3% to $21.3 billion.
Exports grew Exports declined cpiby 11.7% to
remarkably by 27.8% to $23.2 billion due to weak global
$26.8 billion. demand and domestic economic
challenges.
Imports significantly
increased by 39.0% to Imports decreased by 28.4% to
$59.8 billion. $46.9 billion, reflecting policy
tightening and administrative
measures.
Trade deficit surged by
49.6% to $32.9 billion.

Analysis:
This analysis reveals significant fluctuations in trade balances, with FY2022 seeing substantial
export and import growth but also a significant increase in the trade deficit. FY2023 experienced
a decline in exports and a sharp drop in imports, contributing to a decreased trade deficit. These
trends demonstrate the influence of global and domestic economic conditions and policy
measures on trade dynamics.

8.Economic Implications of Shifting Current Account, Services, and Primary Income

Balances
In FY2022, Pakistan had a substantial current account deficit of $13.8 billion, largely driven
by a trade imbalance. However, this deficit significantly reduced to $3.3 billion in FY2023 due
to a decreased trade deficit.
The services account had a deficit of $3.6 billion in FY2022, mainly due to increased
imports in transport and travel services. In FY2023, this deficit shrank to $403 million,
primarily because of a notable reduction in services imports, particularly in the transport
sector.
In FY2022, the primary income account deficit rose to $4.5 billion due to higher interest
payments, while in FY2023, it increased slightly to $4.44 billion, driven by higher profit and
dividend repatriation by foreign firms and elevated interest payments on external debt.

Analysis:
The substantial reduction in the current account deficit from $13.8 billion in FY2022 to $3.3
billion in FY2023 reflects improved external sector stability, reducing reliance on external
borrowing and easing pressure on foreign exchange reserves, enhancing overall economic
stability. This reduction in the trade deficit suggests improved trade dynamics, potentially
leading to less external debt accumulation, a stronger currency, and more sustainable economic
growth. The services account's significant improvement, from a $3.6 billion deficit to $403
million, indicates efficiency gains and can redirect resources for productive investments,
contributing to economic growth. However, challenges in the primary income account call for
prudent fiscal and debt management to balance external debt servicing and profit retention,
bolstering economic resilience.
In summary, these shifts are critical economic indicators, with improvements signaling positive
trends and challenges requiring careful management for ongoing economic stability and growth.
9.Government Borrowing/ Debt Repayment Decline and Implications:

FY2022 Debt Management: FY2023 Debt Management:

Repayment of Rs 569 billion against debt owed to
the State Bank of Pakistan (SBP).
Cumulative debt retirement against SBP debt
stood at over Rs 1.1 trillion in the last two fiscal
years, showcasing substantial repayments.
Payment of US$ 1 billion against maturing
International Sukuks in October 2021.
Utilization of IMF allocated Special Drawing Rights
(SDR) equivalent to Rs. 475 billion to support
budgetary operations.
Relying entirely on long-term domestic debt
securities to finance fiscal deficits and repay debt
maturities.
Repayment of Rs 310 billion against debt
owed to the State Bank of Pakistan
(SBP), contributing to a cumulative debt
retirement of Rs. 2.0 trillion since July
2019.
Introduction of 3-year and 1-year Ijara
Sukuk instruments in January and
February 2023 to diversify Shariah-
compliant options.
Reliance on long-term domestic debt
securities, mainly floating rate PIBs and
Sukuk, for fiscal deficit financing and debt
maturity repayment.

Retirement of Treasury Bills amounting to Rs. 1.5
trillion.
Successful issuance of Shariah-Compliant Sukuk
instruments amounting to around Rs. 1.1 trillion
during July-March FY 2021-22.
Retirement of Treasury Bills amounting to
Rs. 527 billion, reducing short-term
maturities.
Successful issuance of Shariah-
Compliant Sukuk instruments amounting
to around Rs. 401 billion.

Analysis:
The debt repayment strategies, while beneficial, impose burdens on Pakistan's economy,
including high debt service costs, potential challenges from increased external debt, crowding
out of private sector investment, and the need for effective risk management. Balancing these
factors is essential for sustainable debt management.

10.Worker’s Remittances Decline

Workers' remittances grew by 7.6% to $26.1 billion in FY2022 but declined by 13.0% to $22.7
billion in FY2023 due to various factors, including higher inflation in host countries and foreign
currency cash transfers by overseas Pakistanis.
Analysis
The 13.0% decline in remittances in FY2023 is concerning, leading to a reduced inflow of
foreign exchange, potentially impacting Pakistan's balance of payments and foreign exchange
reserves negatively. This decrease can exert downward pressure on the exchange rate,
increasing import costs and contributing to inflationary pressures. Furthermore, lower
remittances may curtail the disposable income of recipient families, affecting domestic
consumption and overall economic growth. This situation highlights Pakistan's heightened
external vulnerability, necessitating diversification of revenue sources and an increased focus
on exports. To mitigate these challenges, policies encouraging remittances and enhancing
economic resilience become imperative.
11.Decline in Foreign Direct Investment
Indicator 2022 2023
 Net FDI US$ 1.4556 billion US$ 1.2 billion
(Jul-Apr FY)
Highest FDI Contributors - China (24.4%) - China (29.7%)
- United States (15.3%)
- Japan (13.9%)
- Hong Kong (7.2%) - Hong Kong (6.7%)
- Switzerland (8.2%) - Switzerland (11.2%)
- UAE (8.19%) - U.A.E (9.7%)
Foreign Exchange Reserves US$ 16.40 billion US$ 4.5 billion
Exchange Rate (April) Rs. 172.95 to a dollar Rs. 283.8 to a dollar
Analysis:
The economic indicators for 2023, compared to 2022, have several implications for Pakistan's
economy. The decline in net foreign direct investment (FDI) inflows reflects challenges in
attracting foreign investment, which is essential for economic growth and job creation. The
substantial reduction in foreign exchange reserves to US$ 4.5 billion by April 2023 raises
concerns about Pakistan's ability to manage external payments and imports, emphasizing the
need to maintain an adequate reserve level for economic stability.

12.Population Labour Force and Employment

Pakistan is the 5th most populous country in the world. According to the National Institute of
Population Studies (NIPS), the estimated population of Pakistan is 229.22 million in 2022.
(PAKISTAN CONSTITUTES 2.86525% OF WORLD POPULATION)

In 2022, urban population is 84.69 million while rural population is 144.53 million.

Pakistan stands among the top 10 countries in the world with large labour force.

According to the Labour Force Survey 2020-21, total labour force is 71.76 million out of which
67.25 million are employed and 4.51 million are unemployed with unemployment rate 6.3%.

Impact of 6.3% unemployment on economy

A high unemployment rate at 6.3% reflects concerning aspects of Pakistan's economic health,
indicating potential challenges such as sluggish growth or structural labor market issues. It
highlights labor market dynamics, including skills mismatches and limited job opportunities,
which can contribute to social and income inequality. Furthermore, unemployment can curb
consumer spending, affecting sectors like retail and hospitality, and strain government finances
due to increased spending on unemployment benefits. It may also deter investor confidence and
hinder economic investment. To address this issue, the government may need to implement
economic stimulus measures. Prolonged high unemployment poses long-term consequences,
such as skills erosion and discouraged workers, hindering economic recovery when conditions
improve.

13.AGRICULTURE
Negative Impact of Flash Floods: The agriculture sector in Pakistan faced a severe setback in
2022-23 due to flash floods. The sector's growth rate slowed to 1.55% compared to the previous
year's growth of 4.27%. This indicates the vulnerability of agriculture to climate-related
challenges, which can disrupt crop production.
Cotton and Rice Production Decline:
The significant decline in cotton production by 41% and rice production by 21.5% has serious
implications. These are vital cash crops for Pakistan's textile industry and export earnings.
Reduced production can lead to increased import costs and negatively affect the trade balance.
Sugarcane and Other Crop Production: An increase in sugarcane production by 2.8% is
positive for the sugar industry. Other crops, with a share in agriculture value addition and GDP,
grew slightly. Diversifying the crop portfolio can make the agriculture sector more resilient.
Maize and Wheat Production: The increase in maize and wheat production is beneficial for
food security. These staples are essential for both domestic consumption and income
generation in the country.
Fishing Sector Growth: The growth in the fishing sector is positive as it contributes to
agriculture value addition and GDP. This can help diversify sources of income and support
livelihoods in coastal areas.
Variation in Crop Production: The text highlights variations in the production of different
crops, such as gram, rapeseed, mustard, bajra, tobacco, Jowar, and barley. These fluctuations
can impact food supply, farmers' incomes, and overall economic stability.
Weather Variability: The data on rainfall patterns underscores the importance of climate
resilience in agriculture. Variations in monsoon and post-monsoon rainfall can significantly affect
crop yields and overall sector performance.
Fertilizer Production and Subsidies: The decrease in fertilizer production and imports, along
with the subsidy on natural gas and imported urea, can impact crop yields if farmers have
limited access to essential inputs. Availability of fertilizers is crucial for agricultural productivity.
Agricultural Financing: The increase in agriculture lending is essential for farmers. Access to
credit can help boost productivity, investment in agricultural inputs, and overall sector growth.
It's a positive sign for the agriculture sector.

The sector's performance directly affects food security, trade balances, rural livelihoods, and the
overall economic stability of the country. Addressing climate vulnerabilities, promoting crop
diversification, ensuring access to essential resources, and providing financial support through
credit are key factors for sustaining and improving the agriculture sector's contribution to the
economy. The impact of the agriculture sector is substantial, given its significance in terms of
employment and economic contribution in Pakistan.

14.MINING AND MANFACTURING SECTOR

14.1.Manufacturing Sector:
Challenges in Large Scale Manufacturing (LSM):
Large Scale Manufacturing growth declined significantly, by 8.11% during Jul-Mar FY2023, in
contrast to the growth of 10.6% in the same period the previous year. This decline reflects
challenges faced by the manufacturing sector, including external and domestic shocks.
 Sectoral Variations: Notable variations in growth were observed within the manufacturing
sector. Furniture products, wearing apparel, other manufacturing (e.g., footballs), and leather
products showed positive growth, indicating opportunities in these sub-sectors.

Negative Growth Sectors: Several sectors, including textiles, food, beverages, tobacco, rubber
products, electrical equipment, pharmaceuticals, wood products, automobiles, iron and steel,
machinery and equipment, chemicals, and other transport equipment, recorded negative
growth. This signals challenges and declining demand in these areas.

14.2.Mining and Quarrying Sector:

Growth in Mining: The mining and quarrying sector showed positive growth of 4.4% during
FY2023, indicating some recovery from the previous year's dip of 7.0%. This growth is primarily
due to the increased production of major minerals like coal, dolomite, barytes, limestone, rock
salt, and ocher.
Negative Growth in Some Minerals: Despite overall sectoral growth, certain minerals,
including natural gas, crude oil, chromite, magnesite, gypsum, sulfur, soapstone, and iron ore,
experienced negative growth. These fluctuations can impact the availability of raw materials for
industries and energy production.
14.3.Implications on Pakistan's Economy:
Challenges in the manufacturing sector, especially textiles, autos, and chemicals, threaten
employment, industrial output, and exports, impacting economic growth. Restrictive State Bank
of Pakistan policies like high-interest rates and import restrictions hurt consumer and business
confidence, reducing borrowing and input availability. Manufacturing, especially textiles, heavily
influences export earnings.
Positive growth in mining and quarrying, especially coal, benefits energy and infrastructure,
while negative growth in natural gas and crude oil raises energy concerns. Government
initiatives supporting industrial growth through energy supply, tariff rationalization, and tax
exemptions can attract investments.
Global economic trends and supply chain disruptions also influence Pakistan's economic
prospects, highlighting its connection to global conditions. The future of Pakistan's
manufacturing and mining sectors has substantial implications for the nation's overall economic
well-being.