Pakistan Economic Survey 2014-15 unveiled – growth target missed – claims inflation down to 4.8% — lowest since 2003
The minister launched the pre-budget document, which showed several missed targets in the economy. However, perhaps the biggest disclosure was the figure that he gave for inflation which he said had come down to 4.8% for July 2014-April 2015, the lowest since 2003.
Compared to the rate of inflation for the same period last year which was 8.7%, if one were to believe the finance minister’s claim, the drop is by almost 45%. The minister said that much of this was linked to the sharp drop in the worldwide price of oil.
According to Mr Dar, Fiscal year 2014-15 registered some remarkable achievements. He said major success of the outgoing fiscal year includes picking up economic growth, inflation contained at lowest level since 2003, improvement in tax collection, reduction in fiscal deficit, worker remittances touches new height, successful launching of Sukuk, foreign exchange reserves significantly increased and stock market created new history.
“Industrial sector continued growth process and recorded growth at 3.62 percent as compared to 4.45 percent last year.”
However, the finance minister could not provide any figure for unemployment rate in the economic survey 2014-15 in his briefing. The official documents also doesn’t contain such an information.
— Major highlights of the economic survey —
Growth & Investment:
- Industrial sector continued growth process and recorded growth at 3.62 percent as compared to 4.45 percent last year.
- Growth of manufacturing is registered at 3.17 percent compared to the growth of 4.46 percent last year.
- Small scale manufacturing witnessed growth at 8.24 percent against the growth of 8.29 percent last year and slaughtering growth is recorded at 3.32 percent as compared to 3.40 percent last year.
- The construction sector has registered a growth of 7.05 percent against the growth of 7.25 percent of last year.
- The Services sector has witnessed a growth rate of 4.95 percent as compared to 4.37 percent last year. The growth performance in services sector is broad based, as pointed out by Mr. Dar, all components contributed positively in growth, Finance and Insurance at 6.1 percent, General Government Services at 9.4 percent, Housing Services at 4.0 percent, Other Private Services at 5.9 percent, Transport, Storage and Communication at 4.2 percent and Wholesale and Retail Trade at 3.4 percent.
- Per capita income in dollar terms recorded a significant growth of 9.25 percent in 2014-15 as compared to 3.83 percent last year. The per capita income in dollar terms has reached to $1,512 in 2014-15.
- Public investment which was recorded at Rs.842 billion in 2013-14 is reported at Rs.1057 billion in 2014-15.
- Foreign private investment has reached to $1666.2 million during July-April 2015 as compared to $1050.3 million showing 58.6 percent higher as compared to last year. Out of total foreign investment, the FDI inflow has reached to $2057.3 million.
- Total investment witnessed a growth of 10.21 percent as compared to 8.4 percent last year. Public investment recorded an impressive growth rate at 25.56 percent as compared to 6.82 percent last year.
- The inflation rate measured by the changes in CPI, averaged at 4.8 percent during July-April, 2014-15 against 8.7 percent in the comparable period last year, which is lowest since 2003.
- The food inflation on average basis in July-April, 2014-15, is estimated at 3.6 percent and nonfood 5.7 percent, as against 9.3 percent and 8.2 percent in the corresponding period last year.
- The wholesale prices of non-food items, whose prices decreased from previous year are furnace oil, kerosene oil, diesel, cotton yarn, soap, printing paper and cement.
- SPI recorded an increase of 1.9 percent during July-April, 2014-15 against 9.8 percent last year.
Trade & Payments:
- Pakistan’s overall external account balance posted a surplus of US $ 2.12 billion during Jul-Apr 2014-15 against US $ 1.95 billion in the corresponding period last year
- The current account deficit stood at US$1.4 billion during Jul-Apr 2014-15, which was 53.5 percent less than the deficit of US $ 2.9 billion in Jul-Apr 2013-14.
- Services account deficit remained lower and stood at $1,632 million during July-April 2014-15 as compared to $ 2,349 million during the same period last year. Lower services account deficit was due to inflows of US $ 1.5 billion under CSF.
- Capital and Financial account recorded a lower surplus of US $ 3.2 billion during Jul-Apr 2014- 15 compared to US $ 5.3 billion during the same period last financial year.
- Worker’s remittances recorded an increase of 16.1 percent during Jul-Apr 2014-15 and reached to $ 14,969.7 million as against $ 12,897.9 million in the comparable period of last year.
- Pak Rupee recorded a depreciation of 2.9 percent in Jul-April FY 15. The Exchange rate which at the end of June 2014 was RS 98.80/$ went up by the end of April 2015 to Rs 101.75/$.
- Public debt was recorded at Rs.16,936 billion or 61.8 percent of GDP as at end-March 2015 compared with 62 percent during the same period last year.
- The primary source of increase in public debt was in domestic debt that positioned at Rs.11,932 billion representing an increase of Rs.1,012 billion, whereas, external debt posed at Rs.5,004 billion representing a decrease of Rs.72 billion as compared to end June 2014.
- Mr. Dar said Pakistan successfully returned to the International Islamic Bond market in November 2014 with the issuance of US$ 1 billion Pakistan International Sukuk.
- During July-March, 2014-15, public debt servicing was recorded at Rs.1,193 billion against the annual budgeted estimate of Rs.1,686 billion. Public debt servicing consumed nearly 44.5 percent of total revenues during first nine months of current fiscal year against a ratio of 47 percent during the same period last year.
- Pakistan also received US$ 2,106 million from the IMF. Importantly, net inflows from the IMF stood at US$ 1,041 million during first nine months of current fiscal year compared with net outflow of US$ 861 million during the same period last year.
- In 2014, the KSE-100 Index gained 6,870 points from 25,261 to 32,131 level, generating a handsome return of 27 percent (31 percent return in US$ terms) for the investors.
- During the first ten months (Jul-Apr, 2014-15) of current fiscal year, the Karachi Stock Exchange (KSE) benchmark-100 Index increased by 4,077 points and closed at 33,730 points on 30th April against 29,653 on June 30, 2014 showing a gain of 13.75 percent during first ten months of current fiscal year.
- Market capitalization has increased by 4.03 percent or from Rs.7,022.70 billion on June 30, 2014 to Rs.7,305.81 billion on April 30, 2015.
- During the first three quarters of the current fiscal year 2014-15, the combined paid-up capital of fifteen big companies was Rs.190.24 billion, which constituted 16.15 percent of the total listed capital at KSE.
Money & Credit:
- During the current fiscal year, SBP reduced the policy rate by a cumulative 300 bps to 7.0 percent w.e.f 25th May, 2015 which is the lowest rate in last 42 years.
- Broad Money (M2) witnessed an increase of 7.33 percent during July-8 th May, 2014-15 against the expansion of 7.05 percent in the comparable period last year.
- Reserve Money grew at 11.51 percent during July-8 th May, 2014-15 against the growth of 9.84 percent in the comparable period last year
- The government borrowing from the banking system for budgetary support and commodity operations stood at Rs.579.7 billion during July-8 thMay, 2014-15 as compared to Rs.175.1 billion in the comparable period last year.
- On the other hand government has borrowed Rs.1,133.6 billion during July-8 th May,2014-15 as compared to Rs.250.6 billion in the same period last year.
Transport & Communication:
- During 2014-15, NHA executed 72 development projects costing Rs. 1,342 billion. Government of Pakistan has allocated Rs. 111.56 billion in the Federal PSDP 2014-15 for NHAs development projects
- During 2014-15, Pakistan Railways procured and assembled 202 passenger coaches, rehabilitate 27 locomotives and repaired 150 locomotives at the cost of Rs.11.289 billion.
- During July-Dec, 2014-15, Telecom sector contributed 73.22 billion to the national exchequer in terms of taxes etc.
- Number of cell phone subscribers reached 134.9 million at the end of March, 2015.
- According to official documents, during the recent visit of President of China, Pakistan and China signed 51 Memorandums of Understanding (MoUs) relating to diverse aspects of bilateral relations, including the Pakistan China Economic Corridor and series of energy projects. Thus almost $15.5 billion worth of coal, wind, solar and hydro energy projects will come online by 2017 and when mature will add 10,400 megawatts of energy to Pakistan’s national grid.
- During July-March FY 2015, primary energy supplied increased to 50.9 million TOE compared to 48.8 million TOE showing a growth of 4.4 percent while energy consumption increased to 25.1 million TOE compared to 24.6 million TOE in same period last year showing a growth of 2.0 percent
- The installed capacity of PEPCO system was 20,850 MW at the end of June 2013 which has gone up to 22,104 MW by the end of June 2014, thus adding 1254 MW more to the national grid.
Social Safety Nets:
- Expenditure on pro-poor sectors in 2010-11 stood at 13.24 percent of GDP. In 2011-12, these were 11.55 percent of GDP and in 2012-13, 13.10 percent of GDP. During 2013-14, expenditures for these sectors were slightly increased and amounted to Rs 1,934.095 billion, which was 14.16 percent of GDP.
- Finance minister said the present government increased BISP budgetary allocation to Rs. 97 billion in 2014-15 from Rs.75 billion in 2013-14. Total expenditure of BISP during the current fiscal year is projected to cross Rs. 90 billion
- The number of BISP beneficiaries is expected to increase from 4.6 million in 2013-14 to 5.0 million by the end of this financial year
- During the period of July 2014 to March 2015, Pakistan Poverty Alleviation Fund has managed to disburse an amount of Rs 9.8 billion to its various on-going projects