Global Rice News

Pakistan’s GDP Exceeds Expectations, Driven by Agricultural Sector Growth

Pakistan’s gross domestic product (GDP) for the outgoing fiscal year exceeded expectations, growing by 2.38% as compared to the estimated 2%, according to Finance Minister Muhammad Aurangzeb. The agriculture sector played a pivotal role in this growth, experiencing its highest growth in 19 years at 6.25% in FY24. Key crops like wheat, rice, and cotton contributed to this growth, with a 16.82% increase.

The fiscal deficit was contained at 3.7% of GDP in the nine months of FY24, compared to last year’s deficit of 3.6%. Revenue collection also significantly increased by 41% year-on-year, reaching Rs9.8 trillion. To achieve fiscal consolidation, the government plans to focus on prudent expenditure policies and implement policy reforms to increase revenue in the FY25 budget.

In the medium term, experts project a normalization of the inflation rate for FY25 and FY26, thanks to improvements in the agriculture sector and favorable global and domestic conditions.

Revamping FBR Structure

Khurram Schehzad, the CEO of Alpha Beta Core and an economic analyst, discussed the government’s plans to revamp the Federal Bureau of Revenue (FBR). He highlighted the benefits of digitalization, including the simplification of the tax system and the elimination of harassment towards taxpayers. The government aims to bring various sectors, such as real estate, agriculture, wholesale, retail, and trade, into the tax net. Schehzad also emphasized the importance of sectors like technology and agriculture for export growth and discussed the possibility of exporting technology to China.

CAD Decline and High Remittances Inflow

Sana Tawfik, an economist and analyst at Arif Habib Limited, noted the positive growth of real GDP, driven by the agricultural sector. The current account deficit has significantly narrowed down by 95% in 10 months due to a decline in the trade deficit. High remittances, particularly from Saudi Arabia and UAE, have supported the economy, leading to a 2.8% appreciation of the national currency. Tawfik expects promising export outlooks, stimulated imports due to increasing domestic demand, and the potential for securing a long-term IMF loan.

Decreasing Inflation and Easy Monetary Policy

Khaqan Hassan Najeeb, a senior economist, highlighted the growth rate of different sectors in the Economic Survey. Agriculture experienced the highest growth at 6%, while industry and the service sector grew by 1% each. Inflation has been decreasing, and the analyst expects further improvement with slower inflation rates. Administrative measures to stabilize the exchange rate have been successful, including curbing smuggling and taking action against illicit exchange. The forecast for the next year’s economic growth anticipates industrial growth, slowing inflation, and a more relaxed monetary policy.

Source: The News