Annual Plan Co-ordination Committee (APCC) scheduled to meet on Friday (today) is expected to recommend to the National Economic Council (NEC) to approve 4.5 percent Growth Domestic Product (GDP) growth rate for upcoming financial year 2010-11 premised on an improvement in supply of gas and electricity and improvement in law and order.
According to the proposed Annual Plan 2010-11 to be considered by APCC, the expected growth of GDP for 2010-11 is targeted at 4.5 percent with contribution of agriculture at 3.8 percent, manufacturing at 5.6 percent and services sector at 4.7 percent.
For 2010-11, the growth in agriculture sector will be contributed by major crops at 3.7 percent, minor crops at 3.0 percent, livestock at 4.2 percent, fisheries 2.0 percent and forestry at 2.5 percent. The industrial sector is targeted to grow by 4.9 percent during 2010-11 based on the supposition that energy shortages will decline and industry will be given priority for an improved supply of electricity and gas. Improved cotton availability will also support the textile sector.
The growth in services sector will be contributed by transport, storage and communications by 4.6 percent, wholesale and retail trade by 5.1 percent and finance and insurance by 3.0 percent. The proposed Annual Plan 2010-11 is aimed to consolidate macroeconomic recovery and further build-upon the recovery of economic growth seen this year.
Specific objectives of the Annual Plan 2010-11 include revival of crop sector, putting manufacturing on a high growth path. Recent efforts to minimise energy shortages have borne results and this should help the revival of production in key sectors if government ensures that energy saved is directed towards productive sectors as well as maintaining a robust growth in services sector.
Pakistan's economic prospects and its future growth rests on an improvement in the overall security situation, a reduction in power shortages, sustainability in the implementation of reforms (particularly tax administration), improvement in law and order and an improvement in external resource inflow. It is also dependent on the pace of global economic recovery. The provision of increase in public sector investment hinges largely on the prospects of increase in fiscal space through increased resource mobilisation.
The measures aimed at keeping inflation at low levels are: maintaining a realistic exchange rate, keeping the budget deficit low accompanied by prudent monetary policy and avoiding food inflationary pressures. The GDP growth for the year 2009-10 was targeted at 3.3 percent to be contributed by sectoral growth rate of 3.8 percent in agriculture, 1.8 percent in manufacturing and 3.9 percent in services sector. Despite a reduction in net external inflows, the economy as a whole managed to surpass targeted levels of economic growth.
The large scale manufacturing (LSM) posted a strong positive growth of 4.4 percent for the current fiscal year. The industrial sector recorded a growth of 4.9 percent. The services sector surpassed the target of 3.9 percent and achieved a growth of 4.6 percent, contributed by wholesale and retail trade at 5.1 percent and transport & communications at 4.5 percent. However, finance and insurance sub-sector showed a negative growth of 3.6 percent. Construction recovering from a low base posted 15 percent growth.
The agriculture sector could not achieve the target and recorded a growth of 2.0 percent. The major crops sub-sector could not achieve the targeted growth rates set for 2009-10. The production of 12,698 million bales of cotton against a target of 11,819 million bales surpassed its target by 7.4 percent. The livestock sector has posted a growth of 4.1 percent. The performance in the livestock was contributed by increase in the production of milk (3.3 percent), meat (4.3 percent), wool (1.2 percent), hides (3.4 percent) and skins (2.3 percent), respectively.
Amid global uncertainty and fluctuations in agriculture prices, government support policies were directed at providing timely inputs and support services to agriculture. Farmers were encouraged to use more fertilisers because of relatively lower prices of fertiliser and higher farm incomes prospects
The fertiliser off-take increased by 32.6 percent in contrast to a decline of 9.2 percent witnessed in the July- January period last year. The urea off take rose by 19.8 percent during this period as against 2.4 percent fall seen in the preceding year. Additional factors that aided agriculture are improvement in water availability due to rainfall in third quarter, improvement in area cultivation for cotton and stable domestic wheat prices, despite substantial drop in international prices.
The impediments faced by the agriculture sector are: overall water shortages, realisation of lower prices in the preceding season for rice and sugarcane and lower credit transfer to the farmers combined with weak demand for credit. Weather conditions and water availability adversely affected the Rabi crops.
Data for July-March 2009-10 shows a growth of 4.36 percent in large scale manufacturing. Large part of recovery emanated from the consumer durables and allied industries. Moreover, the revival in construction activities in both public and private sector resulted in a sharp increase in demand for cement.
Main factors contributing to the growth in consumer durables are improvement in rural incomes and record high remittances. The factors contributing to the recovery in LSM include growth in production of jeeps, cars, tractors, motorcycles, cement, fertilisers, leather products and cotton cloth.
Drawing on growth in agriculture and manufacturing sectors and increase in trade values, the services sector surpassed its target of 3.9 percent and grew by 4.6 percent. The wholesale & retail trade activities are likely to benefit from recovery seen in commodity producing sectors. The transport, storage and communications sub-sector posted a growth of 4.5 percent due to increase seen in value addition of air and road transport, storage and telecom sector.
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