GROWTH ON AGRICULTURE & SERVICES

TARIQ AHMED SAEEDI
(feedback@pgeconomist.com)

Jan 9 - 15, 20
12

The government of Pakistan has revised the GDP growth target for ongoing financial 2011/12 to 3.6 per cent from 4.2 per cent set earlier. Asian Development Bank (ADB) is also on the same page while forecasting the economic growth target for the south Asian economy, saying in its paper Pakistan's economy is expected to recover on the back of resilient agriculture sector and improvement in services sector, albeit energy crisis is all set to silence the growth of large scale-manufacturing sector. LSM recorded 3.57 per cent growth in the first quarter of current financial year. However, it grew 1.14 per cent in 2010-11 as against 4.9 per cent in the preceding financial year.

Manila's lending institution said, as the consensus goes, Pakistan needs at least seven per cent annual growth in order to accommodate its burgeoning workforce expanding at a rate of three per cent every year. It is also notable that 65 per cent of the country's population is under the age of 30. The enterprising group can be tuned in for the economic benefits if the government is able to put right its structural and macroeconomic anomalies.

ENERGY CRISIS

The policymakers should come out of daydreaming particularly in relation to the energy issue. Once they do so, they might be making public solid facts like one made at a public gathering by the petroleum minister Dr. Asim Hussain who said it would take not less than three years to overcome the energy crisis only if mega energy projects such as liquefied natural gas (LNG) terminal and gas imports come on the surface.

He is in favour of the conservation measures to reduce the gas supply-demand gap that, according to him, continues to hamper the power generation.

It is feared forced conservation can stir up social disruption. Industries cannot cut gas usage at the expense of production. There is an acute shortage of gas in the country, dealing hard blow to the textile and fertiliser sectors, which carry on with massive attritions. A sense of ownership about the natural resources has to be developed at public and industrial levels.

The prime source of energy is consumed by domestic, commercial, and industrial sectors. Power generation heavily relies on the local resource. Unquestionably, apathetic usage of and overreliance on gas reserves widened the gap to dangerous mark.

Since no significant addition has been done in the recent past with energy demand scaling up quickly day by day, undersupply happens to be an unavoidable consequence.

The underdevelopment of new rigs and lack of exploration and production works are keeping the potential domestic reserves untapped.

Media reports said the state-run gas development company (OGDCL) has not purchased new rigs for long.

Dr. Asim said that slow local production and no exploration was also because of the unavailability of aerial survey data about potential sites in Sindh and Balochistan that are currently producing 70 per cent and 17 per cent, respectively, of total gas volume produced in the country while they together consume 48 per cent, he said. According to an estimate, gas requirements in the country have surpassed six billion cubic feet per day (bcfd) while total supply is not even near four bcfd. Recently, OGDCL discovered hydrocarbon reserves.

RESILIENT AGRICULTURE

Showing surprising resilience after the two consecutive devastating floods in 2010 and 2011, agriculture sector witnessed high growth in production of major commodities.

Cotton production is expected to witness eight per cent surge in 2011/12 to 9.4 million bales compared with 8.7 million bales last year, according to the United States department of agriculture (USDA).

This year's heavy rainfalls and flash floods ruined 300,000 hectares of standing cotton crops especially in Sindh.

Islamabad has estimated a complete loss of 1.5 million bales and damages to quality fibre output of 3.5 million bales in the affected locations.

"It will be too early to say actually how much damage has been done to cotton because water is still standing in the fields," Naseem Usman, chairman cotton brokers' association told Reuters. "But so far two to 2.2 million bales have been lost in the floods."

Pakistan needs to import two to 2.5 million bales to meet the local demands of textile mills, forecast at 11 million bales by USDA. But, the agency has predicted 'rebound in cotton stocks during 2011/12 filling up domestic inventory.

Sugar output is projected at more than 4.5 million tons this year. A much-required foreign exchange will be saved if the target is hit. Total annual consumption is approximately four million tons.

Rice exports that earn the economy more than two billion dollars are expected to be at 4.5 million tons in the current financial year despite the floods that tamped significantly down cultivated acreage and production.

Rise in fertiliser prices is posing a challenge to wheat crop that may be short of national demand of 25 million tons this year. However, carryover stocks may fill the demand-supply gap.

Other farm produces such as kinnow, mangoes, and dates, etc. performed well last year and generated export revenue for the country.

There is still a need to improve the productivity of overall agriculture sector including livestock and fisheries. Pakistani mangoes were banned in U.S. only because of its not meeting sanitary standards.

In the same way, unhygienic conditions at fisheries dispossessed the country of lucrative exporting destinations in the European Union. Analysts call for the proper mechanism to cash in on the real export potential of the agriculture sector. Investments in agriculture technologies and value addition of farm produces will give a boost to the national economy.

SERVICES SECTOR

Defence and public administration saw meteoric growth during the last financial year. From 2.5 per cent in 2009/10, the sector soared to 13.2 per cent in 2010/11. Social services crossed the target of five per cent and touched 7.1 per cent mark due mainly to external flows of flood relief funds. Finance and insurance sector registered negative growth while retail and wholesale recorded a rise. Overall, services sector grew four per cent. It is likely to achieve five per cent level this financial year. Services sector accounts for more than half of the GDP.