Pakistan's GDP grows 2.09% in Q3 supported by higher growth in agriculture | World News - Business Standard

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Pakistan's economy grew 2.09 per cent in the third quarter of the financial year 2023-2024, supported by higher growth in agriculture, the Pakistan Bureau of Statistics said in a press release on Tuesday.
The estimated provisional growth rate of gross domestic product (GDP) for the financial year ending June 2024 is 2.38 per cent, the bureau said in a statement. That compares with a revised 0.21 per cent economic contraction in the 2023 year when political unrest, a combination of tax and gas tariff hikes, controlled imports, and a steep fall in the rupee currency rapidly pushed up inflation.

Last week in its half yearly report, Pakistan's central bank projected real GDP growth of 2-3 per cent for the fiscal year 2024.

There was no comparable year-ago third quarter GDP data as Pakistan only began releasing quarterly growth numbers from November. That was done in compliance with the structural benchmarks of the current $3 billion bailout programme agreed with the International Monetary Fund and completed last month.

The bureau revised the first and second quarter GDP estimates for financial year 2023-2024 to 2.71 per cent and 1.79 per cent respectively, compared to earlier estimates of 2.5 per cent and 1 per cent.

The provisional 2024 financial year growth in agriculture was estimated at 6.25 per cent, and 1.21 per cent for both industry as well as services, it added.

"The healthy growth of agriculture is mainly due to double-digit growth in important crops", the bureau said, adding that bumper crop of wheat, cotton, and rice contributed to the positive result.

In contrast to 12.4% growth in government spending in the July to September period, growth in farm output, which contributes about 15% of GDP and employs more than 40% of the workforce, slowed to 1.2% in the second quarter of this fiscal year, the weakest since fiscal 2018/19.

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Asia's third-largest economy grew 7.8% and 7.6% on an annual basis in the first two quarters of the current fiscal year that ends in March.
But momentum likely slowed last quarter, as none of the 63 economists surveyed from Feb. 16-26 expected similar growth rates in the October to December quarter. Forecasts ranged from 5.6% to 7.4%.
Official GDP growth releases for the preceding three quarters have broadly surpassed economists' predictions.

"The slowing is predicated both on softer agricultural production and government spending," said Sajjid Chinoy, chief India economist at JPMorgan.
"Government spending was heavily front-loaded this year and is slowing to meet budgeted targets... It remains to be seen how agricultural GDP is impacted by the patchy and uneven monsoon."
The monsoon accounts for about 75% of India's annual rainfall and is the lifeblood of its agriculture-dependent economy.
In contrast to 12.4% growth in government spending in the July to September period, growth in farm output, which contributes about 15% of GDP and employs more than 40% of the workforce, slowed to 1.2% in the second quarter of this fiscal year, the weakest since fiscal 2018/19.
Although the latest government survey estimated rural consumer spending to have more than doubled since 2011-12, large parts of the population living in rural areas face stagnant incomes and high inflation.

To Understand India’s Economy, Look Beyond the Spectacular Growth Numbers - The Wall Street Journal.

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But the way India calculates its gross domestic product can at times overstate the strength of growth, in part by underestimating the weakness in its massive informal economy. There are also other indicators, such as private consumption and investment, that are pointing to soft spots. Despite cuts to corporate taxes, companies don’t appear to be spending on expansions.


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BENGALURU, India—India is set to be the world’s fastest-growing major economy this year, but economists say the country’s headline growth numbers don’t tell the whole story.

The South Asian nation’s gross domestic product grew at more than 8% in its fiscal year ended in March compared with the previous year, driven by public spending on infrastructure, services growth, and an uptick in manufacturing. That would put India well ahead of China, which is growing at about 5%, and on track to hit Prime Minister Narendra Modi’s goal of becoming a developed nation by 2047.

But the way India calculates its gross domestic product can at times overstate the strength of growth, in part by underestimating the weakness in its massive informal economy. There are also other indicators, such as private consumption and investment, that are pointing to soft spots. Despite cuts to corporate taxes, companies don’t appear to be spending on expansions.

“If people were optimistic about the economy, they would invest more and consume more, neither of which is really happening,” said Arvind Subramanian, a senior fellow at the Peterson Institute for International Economics and former chief economic adviser to the Modi government.

Private consumption, the biggest contributor to GDP, grew at 4% for the year, still slower than pre-pandemic levels. What’s more, economists say, it could have been even weaker if the government hadn’t continued its extensive food-subsidy program that began during the pandemic.

The problem is driven in part by how India emerged from the pandemic. Big businesses and people who are employed in India’s formal economy are generally doing well, but most Indians are in the informal sector or agriculture, and many of them lost work.

While India’s official data last year put unemployment at around 3%, economists also closely track data from the Centre for Monitoring Indian Economy, a private economic research firm. It put unemployment at 8% for the year ended March.

At a small tea-and-cigarette stall in the southern city of Bengaluru, 55-year-old Ratnamma said many of her customers in the neighborhood, which once bustled with tech professionals and blue-collar workers, have moved out of the city and returned to rural villages. Some have come back, but she has fewer customers than she once did.

“Where did everyone go?” she said.

She makes about $12 a day in sales, she said, compared with as much as $100 on a good day in the past. It isn’t enough to cover her living expenses or repay a business loan she took out six months ago.

Economists say that the informal sector has been through three shocks in a decade—a 2016 policy aimed at tax evasion called “demonetization” that wiped out 90% of the value of India’s paper currency, a tax overhaul the following year that created more paperwork and expenses for small businesses, and the pandemic.

Pakistan inflation slows to 11.8% in May, lowest in 30 months

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ISLAMABAD (Reuters) - Pakistan's consumer price index (CPI) in May rose 11.8% from a year earlier, data from the Pakistan Bureau of Statistics showed on Monday, the lowest reading in 30 months and below the finance ministry's projections.

The lowest reading comes a week before the central bank meets to review the key rate which has remained at a historic high of 22% for seven straight policy meetings.

Pakistan has been beset by inflation above 20% since May 2022. Last year in May, inflation jumped as high as 38% as the country navigated reforms as part of an International Monetary Fund bailout programme. However, inflation has since slowed down.

Month-on-month consumer prices fell 3.2%, the biggest such drop in more than two years.
In its monthly economic report released last week, Pakistan's finance ministry said it expected inflation to hover between 13.5% and 14.5% in May and ease to 12.5% to 13.5% by June 2024.

"The inflation outlook for May 2024 continues on a downward trajectory, attributed to elevated inflation levels (in the) previous year and improvements in (the) domestic supply chain of perishable items, staple food like wheat and (a) reduction in transportation costs," the report said.

The actual readings have come in even lower due to a sharper dip in food prices, said Amreen Soorani, head of research at JS Global Capital.

Pakistan onion exports amounted to $210 million In first 10 months of FY2023-24

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In the first 10 months of FY2023-24, Pakistan achieved onion exports amounting to $210 million, as reported by local media. The All Pakistan Fruit and Vegetable Exporters Association anticipates this figure to escalate to $250 million by the closure of FY24. Despite the flourishing export figures, the local populace has been subjected to elevated prices for onions, a fundamental kitchen staple. An association representative attributed the price hike to market dynamics rather than the export activity itself, noting a discrepancy between wholesale and retail prices.

Overall vegetable exports during this period reached 1.044 million tons, generating $371 million in revenue, marking an increase in the average price per ton from $233 to $354, attributed to stable currency rates. Onions constituted a significant portion of these exports, alongside potatoes and other vegetables.

The export landscape was also influenced by the import of onions from Iran and Afghanistan and the exploitation of an Indian export ban by Pakistani exporters. Despite efforts to regulate the market, including setting a minimum export price for onions at $1,200 per ton in January 2024, domestic prices have remained high, benefiting exporters significantly. Pakistani onions have found their way to various international markets, notably in the Far East, with potential growth hinging on resolving trade issues with countries such as Indonesia, the Philippines, and Thailand.