ISLAMABAD: All economic indications of the first six months of the current year suggest that Pakistan’s GDP growth will be in the negative arena even though the World Bank has projected it at positive two percent.

This was stated by former finance minister Dr Hafeez Pasha while talking to Business Recorder.

When asked why the International Monetary Fund (IMF) has not yet revised GDP growth projection, he said the Fund would revise the projection of GDP growth after completion of 9th review of the Extended Fund Facility (EFF).

Pasha contended that the economic situation was gloomy and the government decision not to allow opening of LCs had resulted in a reduction of imports in volume terms, by 30 percent, but disturbingly led to non-availability of raw material which accounted for negative three percent growth of Large Scale Manufacturing (LSM) during July-October 2022 and negative seven percent in October 2022.

Pasha said that arrival of cotton crop revealed that cotton production would be 40 percent less, which meant its contribution to the agriculture sector would be negative five percent. “Additionally, there is fear of 8 to 9 percent negative growth in agriculture sector due to damages caused by the floods - to vegetable as well livestock and other crops,” he further said.

Services sector contribution to GDP was not different as consumption of high speed diesel and petrol had declined by 15 percent and growth in banks might be negative as well, said Hafeez Pasha.

Average inflation was projected to remain around 25 percent for the current fiscal year against IMF projection of 19.9 percent, which was on the lower side, Pasha said, adding it could increase between 35-37 percent if the government implemented the Fund condition to increase electricity and gas prices and the contingency measures.

Copyright Business Recorder, 2023