ISLAMABAD – With overall improvement in environment in Pakistan, theinvestment is expected to grow at 17.2 percent of Gross Domestic Product(GDP) during the upcoming fiscal year 2018-19, compared to 16.4 percentduring current fiscal year (2017-18), which would help in achievingsustained and inclusive growth.
Fixed investment is expected to grow by 15.6 percent of GDP in 2018-19,official sources said adding that the National Savings as percentage of GDPwere targeted at 13.1 percent.
The investment target is achievable given improvement in ease of doingbusiness, affordable energy supply, and prospects of higher profits andenhanced capacity utilization rate, they said adding that the spillovereffect from public investment under China Pakistan Economic Corridor (CPEC)was expected to catalyze private sector and foster public privatepartnership.
The expected technology and innovation spill over from interaction ofChinese and Pakistani business is expected to improve production in allsectors.
Further, the lagged impact of current investments, including CPECinvestments by government, private local and foreign investors coupled withprudent monetary and fiscal policy is expected to bolster the economy.
As identified by many indicators, the overall investment climate inPakistan is improving, sources said adding that this was testified by thelatest Perceptions and Investment Survey of Overseas Investors’ Chamber ofCommerce and Industry (OICCI) which identified cement, nonmetallic, foodand the services sectors as promising for lucrative returns in Pakistan.
Growth prospects in agriculture have improved as a result of government’ssupport policies, CPEC investments and improved energy supply along withbetter law and order situation.
The establishment of ‘Special Economic Zones’ also offer prospects foraccelerated growth and investment in the country. CPEC also provides theopportunity to harness the youth bulge.
Meanwhile, during the current fiscal year (2017-18), infrastructure,construction and allied sectors remained vibrant and encouraged investmentin the country and fostered conducive environment for growth.
Total investment for 2017-18 was recorded at 16.4 percent of GDP comparedto 16.1 percent in 2016-17 while the fixed investment to GDP ratio grewfrom 14.5 percent in 2016-17 to 14.8 percent in 2017-18 on the back ofincreased public investment.
Though private investment registered growth of 9.8 percent in 2017-18, yetit has the potential to grow further due to the improved investment milieuand ongoing CPEC and related activities.
Notwithstanding inflationary expectations, government shifted borrowingfrom scheduled banks to State Bank to create space for credit to privatesector.
National Savings grew at 11.5 percent of GDP compared to 12 percent during2016-17.
Increased consumption led to subpar growth of savings, given the inverserelationship between the two.
Though commodity producing sectors have shown steady growth over the pastthree years, there is room for increased investment in these sectors forsustained growth.
In order for investment to reach a level which accelerates growth beyond 6percent, domestic savings need to grow at a faster pace.
However, the sources said, growth in savings lagged behind the requiredlevel while the lack of national savings led to increased reliance onexternal resources for investment.