Finance Minister Muhammad Aurangzeb, while unveiling the Pakistan Economic Survey (PES) 2023-24, announced that Pakistan’s economy fell short of most targets set in the previous budget due to challenging conditions. However, he highlighted that the agriculture sector achieved unprecedented growth, expanding by 6.25%, the highest in 19 years. This growth drove Pakistan’s GDP growth to an expected 2.38% in FY2024, recovering from a contraction of 0.21% in the previous year.
The report emphasized that fiscal discipline was maintained, with a fiscal deficit of 3.7% of GDP and a primary surplus of 1.5% of GDP. Total revenues grew by 41%, led by non-tax revenues and improved tax collection.
The State Bank of Pakistan maintained a tight monetary policy, with a 22% policy rate, helping to ease inflation to 26% from 28.2% the previous year. The current account deficit narrowed to $0.5 billion, and gross foreign exchange reserves increased to $8.0 billion.
However, the PES also highlighted a decline in the investment-to-GDP ratio, sluggishness in large-scale manufacturing, and high public debt.
Key highlights from PES 2023-24 include:
- Most targets were missed, but high agriculture yields drove sectoral growth to nearly double last year’s target.
- Pakistan’s economy is expected to grow by 2.4% in the current fiscal year, compared to a contraction of 0.17% in the previous year.
- Per capita income increased to $1,680 from $1,551.
- The current account deficit narrowed to $200 million in the July to April period, compared to $3.9 billion in the same period last year.
- Inflation eased to 26%, down from last year’s 28%.
- The investment-to-GDP ratio declined to 13.14% from 14.13% in FY 2023.
Aurangzeb highlighted the impact of inflation, stating, “It is important to note the level of inflation in 2022-23. During this year, the Pakistani rupee depreciated by nearly 29%, and foreign reserves dropped to just two weeks of import cover.”
