Pakistan a $300-bn economy, growing on borrowed funds

Pakistan has achieved 5.3-per cent economic growth, the highest in a decade, on the back of recovery in the agriculture sector and better-than-expected performance in the services sector, but its current account deficit widened by a big margin rising to $8.3 billion against the target of $4.5 billion.

Pakistan's gross domestic product, which is the value of all goods and services produced in a particular year, is projected to grow at 5.28 per cent during the fiscal year 2016-17 ending 30 June, Pakistan's National Accounts Committee (NAC) said.

With a 5.3-per cent growth, Pakistan's economy has finally attained the lost momentum of the pre-crisis period before 2008. The nominal size of Pakistan's economy also increased to $304.4 billion.

For the next fiscal year 2017-18, the government has set the GDP growth target at 6 per cent.

The 5.3 per cent growth, although provisional, could be jeopardised by its growing current account deficit.

Pakistan's exports contracted while its imports expanded by a higher percentage, posing a big challenge to government planners.

Pakistan's federal minister for planning and development Ahsan Iqbal attributed the slump in exports to lack of focus on value addition. But he said the government's focus on energy and infrastructure helped achieve the 10-year high growth rate of 5.3 per cent.

That growth in infrastructure, however, has added to  the country's current account deficit as project imports, especially from China under the China Pakistan Economic Corridor continued to pour in.

In its 98th meeting, the NAC approved the provisional growth rate for the fiscal year that ends on 30 June, revised down the 2015-16 growth rate to 4.5 per cent and approved the final growth figure of 2014-15 of 4.1 per cent.

Although the current growth rate is better than the forecasts by international financial institutions, the PML-N government missed its GDP growth target of 5.7 per cent for the current fiscal year.