GDP grows by 4.45% in 2015-16 despite falling exports, low agri-production

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Country’s BoP shrinks by 7.2% to -$2.525bn

The country’s Gross Domestic Product (GDP) increased by 4.45 per cent during the last fiscal year despite falling exports and low agricultural production.

Higher inflows of remittances during the fiscal year 2015-16 could not support the country’s balance of payments (BoP), which shrank by 7.2 per cent to (negative) $2.525 billion in 2015-16 compared to (negative) $2.709 billion during the same period of the previous year.

The main reason behind the deficit in balance of payments was the declining exports, which slid by 12.11 per cent to $20.802 billion last year compared to $23.667 during the same period of 2014-15. Similarly, the imports of the country fell by 2.32 per cent to $44.765 billion against $45.826 of imports during the previous year.

According to the SBP, the country’s total GDP stands at $283.678 billion compared to $271.054 billion in the previous year.

The International Monetary Fund (IMF) and other international donor agencies had already forecast Pakistan’s GDP growth at around 4.0-4.5 per cent in the current fiscal year due to lower oil prices in the international market.

Services sector’s export also declined by 7.6 per cent to $5.460 billion against its import of $7.874 billion. The country’s businesses have paid an extra amount of$2.414 billion against the services received from abroad.

The country received an amount of $19.915 billion in remittances from different countries during the last fiscal year, up by 6.38 per cent compared with $18.720 billion received during the same period of last year.

An analyst of a brokerage house said: “IMF’s loans, country’s remittances and a few cash crops supported Pakistan’s economy last year; otherwise, there is neither new industry being set up nor any investment being received from abroad for the last few months.”

He said the foreign investors of Pakistani bourses were withdrawing their investment because of uncertainty in the local markets.

A surplus in current account means savings exceed investment while a low current account deficit means saving is marginally less than investment, the analyst said. A surplus or low deficit may not always be a sign of economic strength, he added.

The direct investment of the country increased by 38.8 per cent to $1.281 billion mainly supported by oil and gas explorations, power, communication and beverages industry with a total contribution of $1.1 billion during 2015-16.

The Chinese companies invested an amount of $593.9 million. The country’s total investment declined by 65.6 per cent, to $952.4 million, during the last fiscal year.

Dollar after appreciation of almost 6-7 per cent in the open current market remained stable during the last six months and stood at Rs 105.30 because of intervention from the central bank. The greenback came down by Rs 2 in the interbank market during the first quarter of 2015-16 and since then, it has been stable in interbank market.