Missed growth, promising outlook

The Economic Survey for the outgoing year paints an optimistic outlook of the economy, despite the growth target being missed. The survey highlights notable macroeconomic progress featuring enhanced fiscal discipline, LSM growth and exchange rate stabilisation. Importantly, the agricultural sector demonstrated sustained resilience against the dual pressures of climate degradation and extra-monsoonal floods. Moreover. the IMF's endorsement of the economic trajectory offers welcome reassurance, indicating that the stringent reforms under the bailout programme are beginning to take root. The GDP growth rate, however, stood well below the presumed target of 4.2%. At 3.7% though, it did surpass last year's 3.18%, boosting the size of the economy to Rs126.9 trillion. The promising features were a robust LSM growth of 6.1%. followed by a promising 4.9% growth in the services sector which caters to 58% of the overall GDP. The figure for agriculture remained a resilient 2.89%.

The document, as a prelude to the upcoming budget, underscores the consolidated recovery and confidence of the government. It. nonetheless, highlights ongoing tariff uncertainties prior to securing a favourable deal with the US – crucial for making exports competitive. Similarly, the livestock sector showed signs of recovery despite adverse weather conditions, while demand rose across key sectors: automobiles by 31%, fertiliser by 17%, cement by 10%, mobile phones by 9%. petroleum by 5%.

The survey also points out the "transition toward sustainable, inclusive and private-sector-led growth in a demanding environment". It notes that flash floods. subsequent logistical disruption created additional fiscal and welfare pressures, collectively addressed by federal and provincial governments through effective relief and recovery measures. That, in a way, ensured food security, and preserved the hard-earned gains of stabilisation. A combination of an ebbing inflation, a current account surplus,. an influx of forex reserves and remittances serves as a promising sign for an economy in distress.

Comments are moderated and generally will be posted if they are on-topic and not abusive.

For more information, please see ourComments FAQ