Highlights of Economic Survey of Pakistan for 2023-24

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Highlights of Economic Survey of Pakistan for 2023-24

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Updated On: Wed, 12 Jun 2024 13:28:14 PKT

ISLAMABAD (Dunya News) – Finance Minister Muhammad Aurangzeb unveiled the Pakistan Economic Survey 2023-24 on Tuesday, recapping a year of economic distress in the country. 

Dunya News presents key highlights of the document 

• Successful completion of the SBA program with all targets met.
  
• IMF has acknowledged that Pakistan’s economic and financial position has improved on the back of prudent policy management.
  
• Real GDP grew by 2.4% in FY2024 led by Agriculture, surpassing the projections of IMF's 2.0%, ADB’s 1.9%, and WB’s 1.8%. 
  
• The size of the economy in FY2024 increased by 11% to $ 375 bn ($ 338 bn last year).
  
• The agriculture sector recorded a growth of 6.3% - the highest in the last 19 years (FY2005 at 6.8%), ensuring food security and price stability.
• Industrial activity started to recover in Q2-FY2024 with 0.09% growth and further improved to 3.84% in Q3 - mainly due to better crop production and an increase in global demand.
• The improved agricultural productivity in FY2024 will have a spillover impact on the industrial and services sector in FY2025.

• Per capita income increased by $ 129 to $ 1,680, on account of improved economic activity and appreciation of the PKR. 1
• Inflation is on a downward trajectory from 38.0% in May 2023 to 11.8%, at a 30-month low in May 2024 - due to exchange rate stability, monetary tightening, fiscal consolidation, smooth food supply, and favourable global commodity prices.
• Food inflation (Urban) declined significantly from 48.1% in May 2023 to 2.2% in May 2024.
• External accounts considerably improved, with increased exports and contained imports, resulting in a reduced trade deficit, supported by remittances.
• Current Account Deficit (Jul-Apr FY2024) narrowed down by 95% to $0.2 bn ($3.9 bn last year). - CA registered a back-to-back surplus in February ($98 million), March ($434 million) and April ($491 million) of 2024.
• Exports increased by 10.6% due to Food export growth (52%).
• Pakistan's IT exports increased by 21% to $2.6 billion ($ 2.1 billion last year) – with the highest-ever exports of $ 310 million (62% growth) in April 2024.
• Imports declined by 5.3% due to a decline in Food, Petroleum Products, and Cotton.
• Workers’ remittances increased by 7.7% (Jul-May FY2024) due to stability in exchange rate and facilitation under PRI. Pakistan is among the top 5 recipients of remittances.
• External sector stability helped to increase foreign exchange reserves by $5.0 bn to $14.2 bn (31st May 2024) with SBP: $9.1bn & Banks $5.1bn, resulting stabilized exchange rate.
• Under Roshan Digital Account (RDA), an inflow of $7.8 billion with 689,650 accounts has been recorded from September 2020 till April 2024.
• With economic recovery and stability in the exchange rate, the confidence of overseas Pakistanis in the economy has been restored. This is evident from the increased inflows under RDA during Q2 and Q3 of FY2024, which rose to $439 million and $465 million, respectively, compared to $427 million and $390 million last year.
• Thus, cumulative inflows during the last two quarters rose by 11% to $904 million from $817 million last year. Encouragingly, outflows have been reduced significantly by 77% to $79 million during the same period from $340 million last year.
• Stable exchange rate due to:
• - better inflows (IMF, IFIs, others)
• - concerted efforts by LEAs to address smuggling and hoarding
• - institutional efforts by SBP to regulate the currency exchange market
• As a result, PKR/USD parity improved by 2.8% during July-May FY2024, against the depreciation of 28.7% in FY2023.
• FDI improved by 8% in Jul-Apr FY2024 to $ 1.5 billion against a decline of 16% in FY2023 - Mainly from China (30%), Hong Kong (20%), and UK (15%) - Major sectors include Power (43%), Oil & Gas exploration (13%), and Financial Businesses (11%).
• The country’s investment and financing flows strengthened, resulting in a build-up of FOREX reserves, which improved import buffers, from 1 month in June 2023, to currently over 2 months.
• All of the above developments translated into significantly improved investor confidence as the KSE-100 index increased by 83% from 41,453 points to 75,878 points.
• FBR's tax collection performance showed an upward trend, demonstrating the effectiveness of tax policy and administrative measures.
• FBR Tax collection grew by 31% during Jul-May FY2024 to Rs 8,125.7 billion against Rs 6,210.1 billion last year.
• The FBR is undergoing reforms and modernization to become a more efficient organization and achieve optimal outcomes. Efforts are underway to digitize FBR and tax documentation.
• The fiscal deficit has been reduced to 4.5% of GDP during Jul-Apr FY2024 (4.7% of GDP last year), and the primary surplus improved significantly to 1.5% of GDP due to fiscal consolidation efforts.
• Rs 4,644 billion added in Public debt during July-March FY2024 against an addition of Rs 10,005 billion during the same period in FY2023.
• The growth in debt stock has declined significantly from 20.3% (end March 2023) to 7.4% (end March 2024).
• SBP has continued its tight monetary policy stance and maintained the policy rate at 22% during July-May FY2024 – with the objective to control inflationary pressures, as a tool of demand management and economic stabilization policy.
• The asset base of the banking sector grew by 29.5% YoY basis to reach Rs 46.4 trillion by the end of December 2023. While it grew by 19.8% on a YoY basis to Rs 46.5 trillion by the end of March 2024 (26.4% last year).
• The deposit base of the banking sector posted significant YoY growth of 24.2% to Rs 29.1 trillion by the end of December 2023. It posted a significant YoY growth of 19.2% to Rs 29.6 trillion by the end of March 2024 (16.9% last year).
• Bank solvency has been improved as Capital Adequacy Ratio (CAR) – increased to 19.7% by the end of December 2023 from 17.0 % (end of December 2022). It increased to 19.6% by March 2024 from 16.3% (end March 2023). The prevailing CAR is well above the domestic and international minimum benchmarks of 11.5% and 10.5%, respectively.
• The government is diversifying energy mix. Total existing installed capacity of electricity is 42,131 MW, hydel (25.4%), thermal (59.4%), nuclear (8.4%), and renewables (6.8%).