Pakistan's Economy: Out of the Shadows?
Economic growth in first quarter of FY24 recorded at 2.13%, with stock exchange on the rise.
The Pakistani stock market is anticipated to surpass the 75,000 mark in the coming year, propelled by a sustained bull run. The ongoing growth is attributed to favorable economic developments resulting from the IMF agreement and renewed foreign enthusiasm in Pakistan's equity market. Simultaneously, Pakistan unveiled the national accounts report for the first quarter of FY24, revealing a revised negative GDP growth rate of -0.17% for the preceding year, contrasting with the earlier reported growth of 0.29%. However, the finance minister is hopeful for a growth rate of 2 to 2.5%. Is Pakistan finally out of the shadows (for the time being)?
It's important to mention that the quarterly accounts were released to meet the IMF's deadlines and might be tweaked later. Despite the data showing good signs and the stock market doing well, there's not much confidence in the reporting, especially with last year's growth getting revised to negative. Now, something interesting happened in the industries – after going down for three quarters in 2022-23 (except a bit of growth in Q2), they turned things around in Q1 of 2023-24 with a growth of 2.48%. But there's a recent hiccup – some industries had to shut down due to a recent increase in gas prices, especially hitting the construction sector. A similar slowdown has affected automobile sector as well.
Pakistan's latest data release, aimed at transparency and enhanced accountability, appears counterproductive in light of the industries' actual performance.
The country requires overarching objectives and a vision that extends beyond reliance on the IMF program.
GRAPHIC
It is imperative to acknowledge that a substantial segment of Pakistan's industrial sector heavily relies on imported coal, comprising 51% of its comprehensive energy consumption.
The textile industry emerges as a pivotal player, capable of effecting a commendable 27% reduction in the total electricity consumption nationwide. Therefore, it shows the role of industries in the energy crisis.
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