Under the PDM-led coalition government, Pakistan experienced an unexpected contraction in its Gross Domestic Product (GDP) during the fiscal year 2022-23. Contrary to the initial estimate of a 0.29% growth, the National Accounts Committee (NAC) confirmed a decline of 0.17%.
This downturn, the second lowest in the last 50 years, raised concerns about the country’s economic health, attributing the negative shift to decreased consumer spending, reduced investment, lower exports, and other economic pressures.
The industrial sector, including Large-Scale Manufacturing and construction, witnessed a decline, contributing to the overall negative growth. The services sector also faced challenges, with a drop from 0.86% to 0.07% in FY23. The unexpected economic shift marked a stark contrast to the positive trends observed in the previous fiscal year.
A Glimpse of Hope in Q1FY24
In a notable turn of events, the first quarter of the ongoing fiscal year, 2023-24, brought a positive shift in Pakistan’s economic landscape. The GDP growth rate rebounded to 2.13%, signaling a potential recovery.
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This positive momentum was driven by a 5.06% growth in agriculture, 2.48% in the industry, and 0.82% in services. The optimistic figures provided a glimmer of hope amid the economic challenges faced in the previous year.
While the negative growth rate in FY23 raises concerns about potential job losses, decreased government revenues, and challenges in funding public services, it also prompts discussions on necessary policy adjustments.
The government and central bank may need to consider interventions such as interest rate adjustments or fiscal stimulus measures to revive economic growth. The reasons behind the economic downturn could be multifaceted, influenced by global economic trends, internal political stability, changes in commodity prices, or disruptions caused by events like natural disasters or pandemics.