ISLAMABAD: The National Economic Council (NEC) is expected to set GDP growth target of (6.2 percent) in 2018-19 with contributions from agriculture (3.8 percent), industry (7.6 percent) and services (6.5 percent). The growth targets aresubject to favourable weather conditions, managing current account deficit, consistent economic policies and aligned monetary and fiscal policies.
The current account is projected to be in deficit by around $12.5 billion in 2018-19, i.e. 3.8 percent of GDP.
The sector-wise details of targets for financial year 2018-19 are as follows:
Agriculture Sector: The agriculture sector is targeted to grow by 3.8 percent on the basis of expected contributions from important crops (3 percent), other crops (3.5 percent), cotton ginned (8.9 percent), livestock (3.8 percent), fishery (1.8 percent) and forestry (8.5 percent). Higher production of Cotton crop is expected during 2018-19 given better performance of cotton crop in 2017-18 and increasing trend in cotton prices. The growth prospects for livestock, fishery and minor crops are also bright.
Industrial Sector: In view of steady growth rate during the current fiscal year, the industrial sector is expected to grow by 7.6 percent during 2018-19 on the back of better energy supply and planned investment under CPEC. The mining & quarrying sector is projected to grow by 3.6 percent, manufacturing sector by 7.8 percent, LSM by 8.1 percent, construction by 10 percent and electricity, generation & distribution and gas distribution by 7.5 percent. Moreover, the increase in consumer demand is expected to further spur private sector activities and help maintain aggregate demand.
Services Sector: is targeted to grow by 6.5 percent in 2018-19, supported by growth of 7.8 percent in wholesale & retail trade, 4.9 percent in transport, storage & communication, 7.5 percent in finance & insurance, 4 percent in housing, 7.2 percent in general government services and 6.8 percent in other private services. The expected higher growth in commodity producing sectors will support the targeted growth in this sector.
Savings and Investment: Investment target for the year 2018-19 is kept at 17.2 percent of GDP in order to achieve sustained and inclusive growth. National savings as a percentage of GDP are targeted at 13.4 percent. The investment target is achievable given improvement in ease of doing business, affordable energy supply, prospects of higher profits and enhanced capacity utilization rate apart from the spill-over of public investment under CPEC, expected technology and innovation spillover from interaction of Chinese and Pakistani businesses.
Fiscal Policy: Fiscal policy during 2018-19 aims at containing fiscal deficit, mobilizing more revenues, controlling current spending and switching to targeted subsidies while prioritizing development spending.
Monetary Policy: The expansionary monetary policy has generated economic activity in private sector. There are signs of improvement in LSM, and thus momentum in the demand for credit is expected to pick up pace. Average inflation during 2018-19 is projected at 6 percent on the basis of rising commodity prices in the international market. Balance of Payments: Resurgence of global commodity prices in 2018-19 is a positive signal for exporters. Efforts to enhance quality of exportables, diversifying product range and locating better destinations are required in this regard. Trade deficit is projected to remain below $ 29.2 billion based on better export prospects targeted to grow by 11.6 percent during 2018-19 while imports are projected to increase by 6.3 percent. The current account is projected to be in deficit by around $12.5 billion in 2018-19, i.e. 3.8 percent of GDP.
The macroeconomic framework (current market prices) is as follows: (i) the target for GDP (bp) is estimated to be Rs 36,371 billion; (ii) indirect taxes (net) Rs 2,103 billion; (iii) GDP (market prices) Rs 38,474 billion; (iv) net factor income from abroad Rs 1,908 billion; (v) GNP (mp) 40,382 billion;(vi) external resources inflow (net) Rs 1,466 billion. This implies that total resources/ uses is targeted at Rs 41,848 billion. Total consumption is expected to be Rs 35,239 billion whereas total investment will be around Rs 6,609 billion.
Fixed investment is targeted at Rs 5,993 billion, public including general government, Rs 1,850 billion, private Rs 4,143 billion, changes in stocks Rs 616 billion and national savings Rs 5,143 billion.
The target of total investment is 17.2 percent of GDP, public including general government, 4.8 percent of GDP, private 10.8 percent of GDP, national savings 13.4 percent of GDP, external resources inflow (net) 3.8 percent of GDP and inflation 6 percent. The target of GNP (mp) is Rs 196,234 billion.