Economic Survey 2023-24: Industrial and Services Sectors Show Growth

Islamabad.Staff Report..
During the nine months of the outgoing fiscal year, the industrial and services sectors showed improvements, each posting a growth of 1.21 percent. The Economic Survey 2023-24 has expressed confidence in future prospects, highlighting that economic activities are gradually improving, with inflation trending downward and the external sector stabilizing.Pakistan Economy FY24: GDP Grows 2.38%, Agricultural Sector Hits 18-Year High

The Economic Survey 2024 stated that the ‘Manufacturing and Mining sectors’ contributed significantly to the GDP in the outgoing fiscal year 2023-24, accounting for 13.6 percent. These sectors have the potential for further growth. The sectors witnessed growth of 2.4 percent and 4.9 percent, respectively, in the nine months of the current fiscal year compared to a decline of 5.3 percent and 3.3 percent last year.

The manufacturing sector is dominated by Large-Scale Manufacturing (LSM), which accounts for 69.3 percent of it and contributes 8.2 percent of the overall GDP, while small-scale manufacturing and slaughtering comprise 19.5 percent and 11.3 percent of the manufacturing sector, respectively. During July-March 2024, LSM recorded a slight decline of 0.1 percent, which was an improvement from the 7.0 percent decline last year.

A major component of LSM is the textile sector, which continues to face challenges such as rising input costs, lower export values, competition from China, and higher power tariffs, leading to reduced production. The discontinuation of the Export Finance Scheme and high interest rates further exacerbated the situation. During the nine months, 11 out of 22 LSM sectors witnessed growth, including Food, Wearing Apparel, Leather, Wood Products, Coke & Petroleum Products, Chemicals, Pharmaceuticals, Rubber Products, Machinery & Equipment, Furniture, and other manufacturing. The sectors that recorded negative growth include Beverages, Tobacco, Textile, Paper & Board, Non-metallic Mineral Products, Iron & Steel Products, Fabricated Metal, Computers, Electronics & Optical Products, Electrical Equipment, Automobiles, and Other Transport Equipment.

It has been highlighted that the performance of LSM was primarily affected by unfavorable domestic and global events, supply disruptions, and the effects of floods since the beginning of the current fiscal year. LSM has contributed significantly to exports, accounting for about 71 percent, and has employed 14.9 percent of the labor force. “This underscores the potential for further growth and development in the sector, instilling confidence in the future of Pakistan’s economy,” the Economic Survey added.

The Services Sector also posted a positive growth trajectory of 1.21 percent, compared to a 0.01 percent decline last year. The services sector has constituted the largest share of GDP, at 58 percent, for the last several years. The sub-sectors of services include Wholesale & Retail Trade, which showed growth of 0.32 percent in nine months and has a share of 30.8 percent in the Services Sector and 17.78 percent in the GDP. The Transport & Storage sector, with a share of 10.53 percent in GDP, witnessed 1.19 percent growth during July-March 2024.

Accommodation and food services activities, like hotels and restaurants, showed growth of 4.10 percent. The Education sector grew by 10.30 percent, Human Health and Social Work activities by 6.80 percent, and Real Estate activities, with a share of 5.85 percent in GDP, witnessed growth of 3.78 percent compared to the previous year. Conversely, the sub-sectors witnessing a decline included Information and Communication by 3.02 percent, Finance and Insurance activities by 9.64 percent, and Public Administration and Social Security by 5.25 percent.