ISLAMABAD   -   The  government would unveil the Economic Survey 2018-2019 tomorrow (Monday), which would show that government has missed the key economic targets including Gross Domestic Growth (GDP) targets in current fiscal year.

The government had already announced that annual budget for next fiscal year 2019-2020 would be presented in National Assembly on June 11 (Tuesday). As per previous traditions, the government would present the Economic Survey one day before the announcement of annual budget. The incumbent PTI government had missed the major economic targets during its first year of the five years constitutional tenure. Advisor to Prime Minister on Finance Revenue and Economic Affairs Dr Abdul Hafeez Shaikh would unveil the Economic Survey along with his economic team.

GDP growth

The provisional growth of GDP for the year 2018-19 has been estimated at 3.3 percent as against the target of 6.2 percent. The GDP growth of 3.3 percent would be lowest in last nine years. The country’s growth has slowed down due to the negligible growth in the agricultural and industrial sectors in present financial year.

Agriculture

The growth of the agricultural sector has been projected at 0.85 percent during ongoing fiscal year as against the target of 3.8 percent. The government missed all its sub-sector targets except livestock. The production of major crops contracted by 4.4 percent and other crops also saw a negative growth of 6.6 percent. Cotton ginning grew at a pace of less than 2 percent. Livestock recorded a 4 percent growth rate and the forestry sector grew by 6.5 percent but could not meet its target. The fishing sector grew by only 0.8 percent against the 1.8 percent target. Crop sector faced the consequences of acute water shortages during the first half of the 2018 and thus only wheat depicted positive growth of 0.5 percent and cotton, rice and sugarcane witnessed negative growth at -17.5 percent, -3.3 percent, and -19.4 percent, respectively.

Industrial sector

The industrial sector’s growth has been estimated at 0.85 percent during current financial year as compared to target of 7.6 percent. The mining and quarrying sector declined by 1.96 percent. The large scale manufacturing (LSM) sector, which is driven primarily by QIM data (from July 2018 to February 2019), showed a contraction of 2.1 percent. Electricity and gas sub sector has grown by 40.5 percent mainly due to better performance of WAPDA & distribution companies and IPPs. The construction activity has decreased by 7.6 percent.

Services

The services sector is estimated to register growth of 4.7 percent as against the target of 6.5 percent during present fiscal year. Services sector remained major contributor to economic growth as its value added increased by 4.7 percent. Within services sector, wholesale and retail trade sector grew by 3.1 percent whereas transport, storage and communication sector has registered a growth of 3.3 percent. Finance and insurance sector shows an overall increase of 5.1 percent on account of positive contributions from scheduled banks (5.3 percent), non-schedule banks (24.6 percent) and insurance activities (12.8 percent) despite decline in central banking by 12.5 percent. The general government services has grown by 7.99 percent and other private services, a set of computer related activities, education, health & social work, NGOs etc. has contributed positively at 7.1 percent.

Inflation

Inflation rate is projected to remain higher than the target. Inflation rate is estimated at around 7.5 percent as against the target of 6 percent for the ongoing fiscal year. Inflation is at higher side mainly due to the impact of the incumbent government’s economic policies including devaluing the currency, increasing gas and electricity prices and massive borrowing from the central bank.

Budget deficit

As like other economic targets, the government has also missed the target of restricting the budget deficit. The overall budget deficit might cross 7.5 percent of GDP or Rs2.8 trillion till end June. The previous PML-N government had estimated budget deficit at 5.1 percent of the GDP for the entire current fiscal year. However, the deficit has already swelled to the budgeted target in only nine months period. The major reason behind increase in budget deficit is massive shortfall in tax collection.  The shortfall in tax collection has widened to Rs440 billion in the first eleven months of this fiscal year. The FBR has provisionally collected Rs3.31 trillion in taxes during July to May period of the current fiscal year as against the target of Rs3.75 trillion. The overall shortfall might exceed Rs500 billion by the end of current fiscal year.

Current account deficit

The incumbent government has successfully controlled the increasing the current account deficit, which had touched record high $18 billion in last fiscal year. However, current account deficit narrowed 27 percent in first 10 months of fiscal 2019, as a weak rupee and sluggish economy slowed demand for imports. The country posted a current account deficit of $11.586 billion in July-April period of fiscal 2019, narrowing from a deficit of $15.864 billion a year earlier, according to the central bank data.

The trade deficit fell 12.82 percent to $26.302 billion in July to April 2018/19 fiscal year, with imports having declined 7.88 percent to $45.471 billion from $49.360 billion. Exports showed a growth of 0.12 percent in 10 months of this fiscal year. Exports stood at $19.169 billion compared with $19.191 billion in the same period last year.