ISLAMABAD: Pakistan’s economy continued to struggle in FY2024-25 as most key growth targets were missed, according to the Economic Survey unveiled by Finance Minister Muhammad Aurangzeb on Monday.
The finance chief labelled the year as one of “gradual recovery,” claiming the groundwork for a “turnaround” in the next fiscal year had been laid.
GDP growth reached just 2.68%, falling short of the 3.56% target and marking the third consecutive year of underwhelming performance.
Despite some improvements in inflation and investment, agriculture, industry, and services sectors largely underperformed.
Agriculture Crisis Weighs Down GDP
Major crops recorded a steep decline of 13.5%, significantly dragging down overall agricultural output.
The agriculture sector grew by only 0.6%, far below the 2% target and last year’s 6.4% performance.
This slump was attributed to early-season water shortages, initially estimated at 35%, and later revised to 11–12%.
Cotton ginning dropped 19%, while wheat and maize also reported negative growth.
These factors collectively reduced the overall GDP by an estimated 0.6%, underlining the sector’s critical role.
Manufacturing Declines, Services Underwhelm
Large-Scale Manufacturing (LSM) contracted for the third year in a row, shrinking by 1.5% against a target of 3.5%.
Mining and quarrying also continued a downward trend, contracting by 3.4%.
Despite reported industrial growth of 4.8%, analysts questioned the accuracy, suggesting future revisions may reflect a more modest outcome.
The services sector, which contributes nearly 59% to GDP, grew just 2.9%, well below the 4.1% target.
Sub-sectors like wholesale trade, transport, and finance failed to meet expectations, while government services slightly outperformed.
Inflation, however, fell to a six-decade low of 4.6%, supported by aggressive interest rate cuts that brought the benchmark rate down to 11% from 22%.
The public debt-to-GDP ratio declined to 65%, helped by the government’s Rs1 trillion debt buyback strategy.
National savings rose to 14.1% of GDP, exceeding the 13.3% target, and the investment-to-GDP ratio improved to 13.8%.
The finance minister also revealed Indian attempts to block IMF funding for Pakistan, including the recent $1bn tranche and upcoming climate financing facility.
He claimed Pakistan’s allies helped counter these efforts, ensuring continued financial support.
In the upcoming budget, Mr Aurangzeb promised a reform-driven agenda focusing on public finance, pensions, government downsizing, and privatisation.
He backed the survey data despite criticism over reliance on projections, and supported greater private sector involvement in economic reporting.
