By Staff Reporter
ISLAMABAD: Pakistan’s economy expanded 1.73 percent in the second quarter of the fiscal year 2024-25, driven by solid growth in agriculture and services, despite a slight contraction in the industrial sector, the National Accounts Committee (NAC) said on Wednesday.
The National Accounts Committee (NAC) also revised upward the first quarter’s growth rate to 1.34 percent from an earlier estimate of 0.92 percent, signaling a cautiously optimistic trajectory for the country’s economy.
The NAC’s 112th meeting, held at the Pakistan Bureau of Statistics headquarters in Islamabad and chaired by the Secretary of the Ministry of Planning, Development and Special Initiatives, reviewed and finalized the quarterly GDP estimates for FY2024-25.
The updated figures reflect a mixed performance across key sectors, with services emerging as a standout driver of growth amid persistent challenges in agriculture and industry.
Q1 Growth Revised Upward
The NAC revised the GDP growth rate for Q1 FY2024-25 to 1.34 percent, up from the previously approved 0.92 percent. This upward adjustment was largely driven by a significant improvement in the services sector, where growth was revised from 1.43 percent to 2.21 percent. Key contributors included public administration and social security, which swung from a contraction of 4.49 percent to a robust growth of 4.40 percent, alongside education (up from 2.03 percent to 4.76 percent) and health (from 5.60 percent to 6.70 percent).
The industrial sector also saw a reduced rate of contraction, improving from -1.03 percent to -0.66 percent. This was supported by better-than-expected performances in electricity, gas, and water supply (revised from 0.58 percent to 1.37 percent) and construction (from -14.91 percent to -11.71 percent). However, the mining and quarrying subsector faced a sharper decline, revised down from -6.49 percent to -8.06 percent, due to reduced production of coal (-2.08 percent), limestone (8.01 percent), and other minerals (-5.47 percent).
Agriculture, however, experienced a downward revision from 1.15 percent to 0.74 percent, primarily due to weaker performance in other crops (from 2.08 percent to 0.43 percent), linked to a 1.9 percent drop in green fodder production and a contraction in forestry (from 0.78 percent to -2.07 percent). Additionally, the finance and insurance sector saw a notable shift from a modest growth of 1.14 percent to a contraction of 0.28 percent.
Q2 Growth Hits 1.73 percent
For Q2 FY2024-25, the economy posted a provisional growth rate of 1.73 percent, propelled by a 1.10 percent expansion in agriculture and a 2.57 percent surge in services, despite a marginal 0.18 percent contraction in industry. This marks an improvement from the 1.81 percent industrial decline recorded in the same quarter of the previous fiscal year.
Agriculture grew by 1.10 percent in Q2, though this figure masks significant disparities within the sector. Important crops contracted by 7.65 percent, driven by sharp declines in production: cotton plummeted 30.7 percent (from 10.22 million bales to 7.084 million bales), maize fell 15.4 percent (from 9.74 million tons to 8.24 million tons), rice dipped 1.4 percent (from 9.86 million tons to 9.72 million tons), and sugarcane declined 2.3 percent (from 87.64 million tons to 85.62 million tons). The NAC attributed this downturn to a high base effect from the bumper harvests of FY2023-24 and a 6.8 percent reduction in wheat acreage compared to last year.
Other crops showed a modest growth of 0.73 percent, supported by a 14.2 percent increase in potato cultivation area. Meanwhile, the livestock subsector shone with a 6.51 percent growth rate—up from 2.96 percent in Q2 last year—benefiting from a low base and reduced intermediate consumption of dry and green fodders. Forestry contracted by 0.64 percent due to lower output in Khyber Pakhtunkhwa, while fishing recorded a modest growth of 0.79 percent.
The industrial sector’s contraction slowed to 0.18 percent in Q2, a notable improvement from the 1.81 percent decline in the same period last year. This was bolstered by a robust 7.71 percent growth in electricity, gas, and water supply, driven by increased gas output and a favorable decline in the deflator. However, mining and quarrying contracted by 3.29 percent, reflecting reduced quarterly production of coal (-6.34 percent), gas (-6.16 percent), and crude oil (-11.4 percent).
Large-scale manufacturing (LSM) declined by 2.86 percent, with significant negative contributions from sugar (-12.63 percent), cement (-1.82 percent), and iron and steel (-17.86 percent), as captured by the Quantum Index of Manufacturing (QIM) for October-December. The construction industry also slumped by 7.14 percent, tied to the reduced output of cement and iron and steel, key inputs for the sector.
The services sector emerged as the economy’s backbone, growing by 2.57 percent in Q2—up from 1.32 percent in the same quarter last year. Transportation and storage grew by 1.15 percent, supported by higher outputs in road, air, and water transport. A slowdown in CPI-based inflation further boosted real value added in several industries, including information and communication (8.45 percent), finance and insurance (10.21 percent), public administration and social security (9.10 percent), education (4.80 percent), and health (6.60 percent). Other positive contributors included accommodation and food services (4.45 percent), real estate activities (4.12 percent), and other private services (3.14 percent). However, wholesale and retail trade contracted by 1.13 percent, reflecting declines in LSM output and imports.
Copyright © 2021 Independent Pakistan | All rights reserved
