Agricultural sector’s growth is estimated at 1.55% for FY23,
as compared to 4.3% in the earlier year, with crop output posting a negative
growth of 2.49%YoY, offset by Livestock (3.78%), Forestry (3.93%) and Fisheries
(1.44%YoY) growth.
The drop in crop production was largely anticipated in the
aftermath of the floods in August 2022 that ravaged close to a third of the country’s
land mass. Cotton crop was severely damaged during the period, as a result of
which cotton arrivals at ginners remained lackluster, down by 34%YoY in 9MFY23.
Industrial output has been estimated to post negative growth
in FY22 as against 6.83%YoY in the earlier year.
Within the Industrial Activities, Mining & Quarrying has
posted a drop of 4.4%YoY, whereas growth in Manufacturing, Electricity (-3.91%YoY),
Water and Gas supply (-6.03%YoY), and Construction (-5.53%YoY) have been estimated
To note, oil and gas production, as per the PPIS data, has
dropped by 5.3% and 3.6%YoY, respectively in 9MFY23.
Moreover, OMC offtakes have dropped by 24%YoY in 10MFY23.
Furthermore, owing to restrictions on opening L/Cs,
production activities across the country have been hampered.
For instance, data from PAMA indicates that production of
automobiles in the country (excluding two- and three-wheelers) has dropped by
49%YoY in 10MFY23.
With the aforementioned backdrop and the figures furnished,
GDP growth is likely to come in lower than the estimated figure, with a real
possibility of Pakistan posting negative GDP growth in FY23.
Continuation of the FX crisis and the related import
restrictions, along with the possibility of continuing climate-related
disasters, is likely to keep GDP growth in check next year.
Heightened inflation expected for 1HFY24 (expected to taper
off in 2HFY24) is likely to keep services sector growth in check as well.
With the delays in the IMF program and mounting external
financing requirements (US$28 billion), further depreciation of the PKR against
the greenback is likely.
