The first-quarter growth for the current fiscal year stood at 0.92 percent, which was significantly lower than the 2.5 percent recorded in the previous financial year. Even that was significantly lower than the 5 percent-10 percent range needed The desire to contain inflation resulted in the State Bank of Pakistan raising its benchmark rate to 22 percent, with the result that growth was also squeezed. The growth figure has come out positively because of growth in agriculture and services. The individual components of growth are a great cause for concern.
Industry has virtually collapsed. There was a contraction of 1.03 percent, and a decrease of 0.82 percent in largescale manufacturing was perhaps the most worrisome, for that is the sector the government was relying on to boost much-needed exports in textiles, and to substitute imports in engineering goods. The falls of 19.8 percent, in crude oil production, of 6.7 percent in gas production, and 12.4 percent in coal production, all merely mean higher imports.
Agriculture, the pillar on which the national economy rests, was also not going as well as needed. Major cops declined by 11.19 percent, with cotton down a precipitous 29.6 percent. meaning that exports would be badly affected, as both raw cotton and cotton manufacturers are exported. With sugarcane also down 2.08 percent, its manufacturer would decline, necessitating exports. Growth in minor crops and livestock allowed the sector to grow 1.15 percent. The services sector grew 1.43 percent, with human health and social activities growing 5.6 percent.
Overall, the economy reflected a dismal picture, and once again, put the government in the awkward position of having to choose between growth and inflation control. That the economy needs to grow is not just because of the need for prosperity, but because the country needs to ern foreign exchange to service its debt and to provide jobs to the mass of new entrants into the job market arriving every year.
Perhaps the government should take comfort from the fact that the stock market seems to a life of its own, and did not pay any attention to the figures, which should have been a dampener, and had a 3500-point rise on its premier index. However, though in absolute terms the GDP growth was nothing to write home about, the recent cuts in the SCP’’s benchmark will take a little time to go through the economy and stimulate the growth all need.
