The Annual Plan Coordination Committee (APCC) on Wednesday approved major macroeconomic targets to be achieved in upcoming fiscal year.
The APCC approved 5.5 per cent growth rate target for the coming fiscal year, hoping that an improved energy supply and a relatively competitive exchange rate will support the economic progress. The plan also suggests to measures to overcome circular debt aimed at ensuring sustainable economic growth rate.
The proposed annual plan also suggests further reduction in fiscal deficit by mobilising additional revenues and demand for structural reforms besides security challenges. The economic growth that stood at 4 per cent in the last fiscal year marginally grew to 4.2 per cent in the outgoing fiscal year. However, the government has decided to ease some of the constraints to achieve 5.5 per cent growth rate in the next fiscal year.
In order to tackle economic hurdles and place the economy on the right path, the annual plan 2015-16 aims at higher growth rate and sectoral targets taking into consideration assumptions of better energy supplies, normal weather conditions, investor’s positive sentiment about Pakistan economy’s prospects and political stability, the working paper said.
The growth of GDP for 2015-16 is targeted at 5.5 per cent with contributions from agriculture (3.9 per cent), industry (6.4 per cent) and services (5.7 per cent). Nominal GDP is targeted to grow by 11.8 per cent and GNP per capita is projected at Rs 167,915. The growth targets are subject to risks like deterioration in energy availability, extreme weather fluctuations, non-implementation of envisaged reform program and fiscal profligacy.
In annual plan 2015-16, the said agriculture sector is targeted to grow by 3.9 per cent on the basis of expected contributions of important crops (3.2 per cent), other crops (4.5 per cent), cotton ginned (5 per cent), livestock (4.1 per cent), fishing (3.0 per cent) and forestry (4.0 per cent).
Performance of the industrial sector has not been impressive during the current fiscal year as it missed the target of 6.6 per cent. However, it is expected that the industrial sector will grow by 6.4 per cent during FY 2016 on the back of better energy supply and planned investment under CPEC.
Better energy supply is expected with the import of LNG. Likewise, some energy-related fast-track projects under the China-Pakistan Economic Corridor (CPEC) are expected to be completed in the next fiscal year.
Hence, it is assumed that improved energy availability will play a significant role in the industrial growth during FY 2016. The LSM growth will also benefit from the backward and forward linkages of huge infrastructure projects under CPEC and increasing demand for housing. It will result in a sharp increase in demand for cement and iron.
Inflation has come down to 4.8 per cent during July-April 2014-15 from 8.7 per cent in the same period of last year. Inflation in 2014-15 is likely to be around 4.5-4.8 per cent. In view of the rationalization of subsidies, reversal of global prices trend and rising demand, inflation for 2015-16 is projected at 6 per cent.
Exports for 2015-16 are projected to grow by 5.5 per cent to $25.5 billion from $24.2 billion estimated for 2014-15. Imports during 2015-16 are projected to increase by 6 per cent to $43.3 billion from $40.8 billion estimated for 2014-15. Hence, the trade balance is projected to be in deficit by $17.7 billion in 2015-16. The current account is projected to be in deficit by $2.8 billion in 2015-16 (1 per cent of GDP) as against a deficit of $1.6 billion (0.6 per cent of GDP) estimated for 2014-15.
