GDP growth rate was 5.97% against a target of 4.8%. This overall growth came on the back of 4.40% growth in Agriculture, 7.19% growth in Industries and 6.19% growth in Services — all three major sectors surpassed their targets of 3.5%, 6.5% and4.7% respectively.
I am amazed at the wit of Finance Minister Miftah Ismail. He said "achieving growth was not an issue for Pakistan; the real issue is achieving sustainable growth". "This year GDP growth is 5.97% ... but as usual the current account deficit has once again shown that we have a balance of payments issue," Ismail said.
He said, the country's growth story — having rebounded from the pandemic and maintaining a V-Shaped recovery by posting real GDP growth of 5.97% was dampened in the face of glaring macroeconomic imbalances, suggesting that this growth is unsustainable.
"Despite the encouraging export performance, the country’s imports have also risen significantly. The broad-based surge in global commodity prices, Covid-19 vaccine imports and demand-side pressures, all contributed to the rising imports," said the minister.
Resultantly, trade deficit grew by 55.5% and amounted to US$32.9 billion or 8.6pc of the GDP, which is "historically high".
Despite export receipts and workers’ remittances both reaching record-high levels, import payments registered a sizable, broad-based increase. As a result, the current account deficit widened considerably over last year.
These payment pressures manifested on the interbank PKR-US$ exchange rate, which depreciated by over 14% during Jul-Mar FY2022. Foreign exchange reserves held by Pakistan’s central bank also came under pressure, dropping US$5.9 billion to US$11.4 billion by end March 2022.
"The widening of the current account deficit together with a build-up in inflationary pressures in the backdrop of the geopolitical situation, especially the Russia-Ukraine conflict, created significant challenges for sustainable economic growth.
