Agriculture was targeted to grow by 3.9 percent on the basis of expected contributions of important crops (3.2 percent), other crops 4.5 percent, cotton ginned 5 percent, livestock 4.1 percent, fishing 3 percent and forestry 4 percent. However, agriculture sector's performance deteriorated in 2015-16 and registered a decline of 0.19 percent due to government's inappropriate polices and an international fall in commodities' prices. Primarily, cotton crop failed to achieve the target, showing a decrease of 27.8 percent to 10.1 million bales in 2015-16 as against 14 million bales in 2014-15.
The situation further deteriorated by negligent management of cotton crop especially in case of agrochemicals. Torrential and prolonged rains especially during June-August 2015-16 compounded the damage to the crop and caused pest outbreaks (eg pink, bollworm, army worm).
Rice crop also registered a negative growth of 2.7 percent in its production because areas under cultivation declined by 4.9 percent over last year. However, sugarcane crop registered a growth of 4.2 percent. The climate change conditions stayed favourable for wheat crop which grew by 1.6 percent. The failed cotton crop during Kharif season also led farmers to substitute some of the cotton areas for wheat crop. Therefore, overall growth in agriculture sector fell by 0.19 percent in 2015-16. Major crops fell by 7.18 percent while other crops registered a decline of 0.31 percent. Livestock, fishery and forestry achieved growth of 3.63 percent, 3.25 percent and 8.87 percent, respectively. The government has also claimed that the country's industrial sector has shown extraordinary performance and registered a growth of 6.8 percent during 2015-16, surpassing the target of 6.4 percent. The growth impetus came from construction and electricity generation and gas distribution sector. This implies that other sub sectors of industry did not perform well.
Manufacturing sector grew by 5 percent against the target of 6.1 percent and showed lower than expected growth. The Large Scale Manufacturing (LSM) witnessed a growth of 4.61 percent as against the target of 6 percent. The sector which fell in the negative growth zone comprised food products by 58.03 percent, engineering products by 17.64 percent, electronics 9.93 percent, iron and steel products by 7.4 percent and paper & board 2.9 percent.
Impressive growth was recorded in automobiles 23.43 percent, fertiliser 15.92 percent, rubber products 11.68 percent, leather products 12.18 percent, chemicals 10 percent, non-metallic mineral products, pharmaceuticals 7.21 percent, food beverages & tobacco 3.66 percent and textile 0.62 percent. Mining and quarrying sector posted a growth of 6.8 percent and surpassed the target of 8.3 percent and 6 percent respectively for 2015-16. Small and household manufacturing registered a growth of 8.21 percent against 8.3 percent. Construction sector showed a significant growth of 13.1 percent against the target of 8.5 percent.
Ministry of Finance has also claimed that the services sector met its target of 5.7 percent. The growth was broad based with positive contribution by its constituent subsectors ie transport, communication and storages, finance and insurance. Wholesale and retail trade missed the target of 5.5 percent and managed to grow at 4.57 percent against the backdrop of negative performance of the agriculture sector. The subsector, transport, storage and communication (dominated by transportation services) managed to grow by 4.06 percent, lagging behind its target of 6.1 percent.
In transportation, the contributors to its positive growth were air transport, communication, road and storage whereas Railways and pipeline transport registered negative growth. A positive growth was registered in finance & insurance which attained a growth of 7.8 percent against a target of 6.5 percent. This was achieved mainly due to better performance of scheduled banks and in activities auxiliary to financial services and insurance activities. The financial sector in Pakistan is gaining momentum with the improvement in business conducive environment and initiation of various projects under the CPEC. General Government Services exceeded the target of 6 percent growth rate and registered a growth rate of 11.1 percent. With a positive growth in real estate, construction and residential societies, Housing Services registered the targeted growth of 4 percent maintaining the same pace over three consecutive years since 2013-14. Other private services, which include renting of machinery and equipment, computer related activities, education, recreational, cultural and sport activities grew positively at 6.6 percent during 2015-16.
During 2015-16, fixed investment as a percentage of GDP declined from 13.9 percent in 2014-15 to 13.6 percent in 2015-16, missing the target of 16.1 percent. Public investment as a percentage of GDP grew from 3.7 percent to 3.8 percent whereas private investment as percent of GDP declined from 10.2 percent to 9.8 percent.
National Savings were found to be at 14.6 percent of GDP, falling short of the target of 16.8 percent of GDP but increased from revised estimates of 14.5 percent of GDP in 2014-15.
Overall fiscal deficit was curtailed, from 8.2 percent in 2012-13 to 5.3 percent in 2014-15 and was targeted at 4.3 percent during 2015-16 (as a percentage of the GDP). Fiscal policy was focused on consolidation through targeted subsidies, broadening tax base and prioritising the public expenditure in line with the growth and development objectives of the Vision 2025.Consolidated total revenue during July-March 2015-16 stood at Rs 296l.9 billion which is 10.4 percent higher than the total revenue of Rs 2682.6 billion collected during the same period of last year.
The FBR's tax collection was recorded at Rs 2103 billion during the period under review as compared to Rs 1,775 billion during the comparable period of last year, registering a growth of 18.5 percent. Direct taxes and indirect taxes registered a growth of 13.2 percent and 21.9 percent, respectively. Customs duties, sales tax and federal excise duty recorded impressive growths of 43.6 percent, 17.6 percent and 10.2 percent, respectively. Current and development expenditures grew by 6.5 percent and 20.7 percent, respectively. Within development expenditure, PSDP registered a growth of 24.8 percent with an increase in both federal and provincial PSDP spending by 20.8 percent and 27.7 percent, respectively.
The policy rate stood at 40 year low as State Bank of Pakistan embarked on monetary policy easing since second quarter of 2014-15. The policy rate was gradually reduced from 10 percent (in November 2014) to 5.75 percent percent (in May 2016). Private sector credit gained momentum and availed credit not only for working capital requirements but also for fixed investments.
Money supply as measured by broad money (M2) grew by 7.5 percent (Rs 845.9 billion) from 1st July 2015 to May 13, 2016 against its expansion by 8.2 percent (Rs 816.7 billion) during the corresponding period of 2014-15. Net Foreign Assets (NFA) of the banking system registered an expansion of Rs 121.7 billion as compared to its expansion of Rs 230.1 billion during the comparable period of last year. Net Domestic Assets (NDA) of the banking system witnessed an expansion of Rs 724.2 billion as compared to its expansion of Rs 586.5 billion last year. Reliance on borrowing from commercial banks decreased from Rs 883.6 billion in the corresponding period of last year to Rs 771.4 billion during the period under review. Government borrowing from the SBP, on the other hand, registered a net retirement of Rs 151.9 billion as compared to its retirement of Rs 266 billion last year. Credit to private sector expanded by Rs 294.4 billion against its expansion of Rs 168.4 billion last year.
Consumer Price Index (CPI) inflation for 2015-16 was targeted at 6 percent. Inflation was contained (both on YoY and average basis) for the first two quarters of 2015-16. However, inflation on YoY basis showed an increasing trend in the remaining two quarters whereas average inflation maintained a declining trend. Though CPI increased by 4.2 percent in April 2016 (as against 2.1 percent in April 2015) average inflation remained prominently low. It was registered at 2.79 percent for July-Apri1 2015-16 as against 4.81 percent in July-April 2014-15. Average SPI also remained low for the period (1.44 percent) while average WPI was negative (-1.29 percent). The muted trend in average inflation has continued throughout 2015- 16 due to high base effect and deceleration in global oil and commodity prices. However the expansionary monetary policy along with rising food prices (food basket: weight 34.8%) kept both food (4.7 percent) and non-food inflation (3.8 percent) on the higher side in April 2016. Core inflation stood at 4.4 percent in the first ten months compared to 5.4 percent last year.
The current account deficit for July-April 2015-16 stood at $1.5 billion as against a deficit of $1.8 billion in July-April 2014-15 thus showing improvement in current account balance (deficit of 0.6 percent of GDP in July-April 2015-16 as against 0.8 percent of GDP in July-April 2014-15). The Economic Survey envisaged export growth of 5.5 percent and import growth of 6 percent with the underlying assumption of' global growth recovery, better fiscal management, improved energy availability and competitiveness. Trade deficit during the first ten months of this fiscal year stood at $16 billion with the decline in exports outpacing decline in imports. Exports declined by 9.5 percent (from $20 billion in July-April 2014-15 to $18.2 billion in July-April 2015-16) whereas imports fell by 4.7 percent. The decline in exports and imports resulted from a global slump in oil and commodities prices and receding growth.
Workers' remittances increased steadily during 2015-16. During July-April 2015-16, remittances amounted to $16 billion as against $15.2 billion in the corresponding period of last year, thereby showing an increase of 5.25 percent. Though the pace of remittances growth slowed yet the flow is consistent (the UAE 4 percent, Saudi Arabia 5.8 percent, GCC countries 11 percent and the EU 4.7 percent). However remittances from the US showed a decline of 6 percent during the first ten months of current fiscal year.