Spearhead Research Infographic
GDP is projected to grow at 5.5% this fiscal year and possibly 5.8% in 2018-19 only if macroeconomic risks are managed. Acceleration will be driven by consumption on the demand side while growth is likely to come from the service and industry sectors on the supply side.
Remittances were 62% of all inflows in 2016-17 but remittances are likely to remain subdued as Gulf nations make a gradual economic recovery.
Pakistan’s exports grew 27.3% from 2005-16. In the same period Bangladesh exports grew by 276% and India’s by 165%. Trade to GDP ratio has remained at 28.1%–low.
Only 12.3% of small firms in Pakistan use foreign inputs or supplies in their products compared to a global average of 55%.
Collection from direct and indirect taxes grew by 12.7% and 5.1%. On the average 17% of taxes were collected as withholding tax over the last three years. Non-tax revenues rose 23% but in 2016-17 provincial non-tax revenue fell 15% in contrast of a 23% growth last year.
Pakistan’s tariffs are twice as high as the world’s average. Pakistan’s simple average tariff rate was 13.6% in 2014 compared to South Asia’s average of 11.7%.
Fiscal deficit during 2017-18 will widen from 5.8% in this fiscal year—fiscal slippages are expected to continue through the election cycle.
Inflation remained moderate in 2016-17 but is expected to rise steadily in FY18 and 19. It will be driven by higher domestic demand and global oil prices.
Moderate rise in inflation and manageable growth in debt financing costs are expected but a weaker rupee would help improve external accounts.
TO MAINTAIN CONTINUITY OF TAX REFORMS A DETAILED REVIEW OF THE TAX POLICY IS NEEDED. A FULLY AUTOMATED AND ABLE TAX ADMINISTRATION IS ALSO IMPERATIVE.