Economists skeptical of Pakistan’s projected 3.6 percent growth rate for next fiscal year

A labourer pulls his handcart along a street on a hot summer afternoon in Rawalpindi on May 30, 2024 amid the ongoing heatwave. (AFP)
Short Url
Updated 02 June 2024

Economists skeptical of Pakistan’s projected 3.6 percent growth rate for next fiscal year

  • Government is expected to present the annual budget on June 10, as it hopes the inflation to drop to 12 percent
  • Economists say poverty, unemployment will increase amid tight fiscal and monetary policies, high interest rates

ISLAMABAD: Pakistani economists on Saturday expressed skepticism over the government’s claim it would be able to accelerate economic growth to 3.6 percent in the next fiscal year from 2.4 percent in the outgoing financial year, warning that employment and poverty rates could increase further in the coming months.

Prime Minister Shehbaz Sharif’s administration is expected to present the annual budget on June 10, at a time when the country is facing an economic crisis with double-digit inflation and struggling to secure funding from the International Monetary Fund (IMF).

The government on Friday approved a 3.6 percent growth target for the 2024-25 budget, boosting the development allocation to Rs1.2 trillion ($4.3 billion) from Rs950 billion ($3.4 billion) in the outgoing fiscal year, which has now been slashed to Rs717 billion ($2.6 billion) due to fiscal constraints.

“Looking at the economic indicators including agricultural and large-scale manufacturing growth, it seems the government may hardly be able to achieve around three percent growth rate,” Sajid Amin, economist and deputy executive director at the Sustainable

Development Policy Institute (SDPI) in Islamabad, told Arab News.

“The governments usually budget a high growth target and then revise it down,” he said, referring to the outgoing fiscal year’s growth rate as the government had targeted 3.5 percent but achieved only 2.4 percent.

Amin said that around nine million youth were entering the labor market annually and Pakistan would require at least a five percent growth rate to create job opportunities for them.

“Even if the government achieves the growth target, the unemployment and poverty rate would unfortunately increase,” he said.

According to a recent Planning Commission report, the government expects inflation to moderate to 12 percent in the next fiscal year while admitting that growth prospects “hinge upon political stability, exchange rate, macroeconomic stabilization under IMF’s program and expected fall in global oil and commodity prices.”

Ali Khizar, an economist, said the country was faced with gross financing gaps and development would remain in check with real interest rates to stay positive.

“Pakistan’s current account is expected to stay close to zero until the foreign exchange reserves build,” he told Arab News, adding that commercial financing revenues would remain low and with all this Pakistan would not be able to achieve the targeted growth rate.

“Even 3.6 percent growth rate is not a good number to create job opportunities and bring people out of poverty,” he continued, adding that Pakistan would have to ensure tight fiscal and monetary policies with high interest rates to secure the IMF loan program.

These, he pointed out, would slow down the economy.

Saudi industry minister meets with Brazilian companies to discuss vaccine localization

Updated 25 sec ago

Saudi industry minister meets with Brazilian companies to discuss vaccine localization

RIYADH: Following meetings between Saudi Arabia’s industry minister and Brazilian companies, the Kingdom aims to boost the localization of vaccines and pharmaceuticals by leveraging Brazil’s expertise.

During his discussions with several investors in the South American nation, Bandar Alkhorayef indicated the scope of the potential collaboration, as the sector plays a large part in the country’s National Industrial Strategy.

This is due to its crucial role in achieving pharmaceutical and health security and enhancing the Kingdom’s independence in this field by securing its medical needs and building specialized industrial capacities.

Saudi Arabia’s Vaccines and Biomedicines Industry Committee, led by Alkhorayef, aims to identify the best technologies for investment. Its goal is to transfer and localize knowledge, building local industrial platforms with international standards to establish the Kingdom as a logistics and industrial powerhouse for vaccines and vital medicines in the Middle East and the Islamic world.

In a release on his X account, the minister said he visited the Butantan Institute, which he deemed the world leader in biotechnology research, adding: “I discussed with the director of the institute ways to enhance cooperation in the localization of the vaccine and pharmaceutical industry."

During his discussions with investors and company heads, Alkhorayef underscored Brazil’s readiness to partner with Saudi Arabia across all targeted industrial sectors, particularly pharmaceuticals and vaccines. 

This collaboration is seen as a strategic move to leverage both nations’ strengths to develop supply chains, enhance technological exchange, and drive innovation for sustainable development.

Alkhorayef announced in June 2022 investment opportunities in the sector worth over SR11 billion ($2.9 billion). Saudi Arabia is keen to attract world-class interest in healthcare by offering financial incentives and leveraging its robust capabilities. The primary objective is to localize 80 to 90 percent of insulin production.

By building strategic partnerships with leading international companies, transferring technology and knowledge, and fostering public-private partnerships, the Kingdom aims to ensure sustainable growth in the healthcare sector. 

The focus on increasing local content and adopting the latest medical technologies underscores the nation’s ambition to become a major regional pharmaceutical manufacturing center.

Saudi Arabia showcases mining opportunities during ministerial visit to Brazil

Updated 36 min 27 sec ago

Saudi Arabia showcases mining opportunities during ministerial visit to Brazil

  • Minister of industry and mineral resources highlighted the advantages of investing in the Kingdom

RIYADH: Saudi Arabia has invited Brazilian companies to invest in its mining sector, highlighting substantial growth opportunities during a visit by its top minister to the South American country. 

At a roundtable meeting hosted by the Federation of Industries in Sao Paulo, Saudi Minister of Industry and Mineral Resources Bandar AlKhorayef said that mineral production is a global issue requiring international leadership and collaboration due to its critical role in the global energy transition. 
Saudi Arabia aims to attract international players as its mining sector prepares for expansion under the government’s initiative aligned with Saudi Vision 2030. This effort seeks to enhance licensing transparency, promote national industries, and boost local content development and job creation. 

During the meeting, the minister said: “The Kingdom recognizes that global mineral production challenges require collective leadership. Our strategy for real progress is rooted in collaboration, and while we maintain our ambitious goals, we focus on forging strong partnerships worldwide.” 
He added: “Mineral production transcends economic value; it embodies the potential of our country and people. With our rich resources, skilled workforce, and exceptional investment opportunities, the Kingdom is poised for transformative growth.” 
The minister highlighted the advantages of investing in Saudi Arabia, including its abundant natural resources, skilled workforce, modern infrastructure, and supportive business environment. 
Alkhorayef invited Brazilian companies to attend the fourth edition of the International Mining and Resources Conference, set to take place in Riyadh in January. 

He said that the event has become the most important platform for discussing opportunities, issues, and solutions in the global mining sector, according to a statement from the ministry. 

Through its National Industry Strategy, Saudi Arabia is positioning itself as a leader in various sectors, offering investment opportunities in over 800 projects valued at SR1 trillion ($266.59 billion). This initiative aims to enhance exports, transform the national industrial landscape, and support the country’s economic diversification efforts. 

SAMI to become authorized repair center for C-130 Hercules aircraft, Airbus rotorcraft platforms

Updated 43 min 59 sec ago

SAMI to become authorized repair center for C-130 Hercules aircraft, Airbus rotorcraft platforms

RIYADH: Aerospace and defense firm Saudi Arabian Military Industries will become an authorized center for C-130 Hercules aircraft and Airbus rotorcraft platforms as it extends its maintenance, repair, and overhaul capabilities.

MRO services include the repair and refurbishment of highly engineered components and assemblies, such as cases, rotating life-limited parts, rotating air seals and turbine shrouds, as well as vanes and honeycomb air seals. 

The Public Investment Fund-owned company signed two agreements with major original equipment manufacturers Lockheed Martin and Airbus Helicopters during the Farnborough International Airshow, held in the UK from July 22 to July 26, the Saudi Press Agency reported. 

The deals fall in line with SAMI’s aim to be among the top 25 defense companies in the world by 2030. It also aligns well with the Kingdom’s goal of strengthening its defense sector, emphasizing localization as a top priority, with Saudi Arabia targeting to domesticate 50 percent of its defense spending by 2030.

“The two partnerships underline our commitment to fostering local capabilities and reiterates our goal to further localizing the defense industry sector,” SAMI’s CEO Walid Abukhaled said. 

Through the first deal, SAMI Al-Salam will be certified as a Lockheed Martin 14-approved C-130 Hercules Service Center worldwide. Through the second agreement, the company will commit to localizing MRO capabilities through Airbus Helicopters to enhance rotorcraft competence. 

The aviation sector in the Kingdom is also experiencing substantial growth, thanks to billion-dollar investments in the Vision 2030 plan, which aims to diversify the economy beyond fossil fuels and promote the private sector.

“We will continue to focus on training and developing national talent through such programs with leading global companies, aiming to support the localization of over 50 percent of government spending in line with the objectives of Saudi Vision 2030,” Abukhaled added.

Lack of freshwater, sanitation hindering human capital development, Saudi minister warns 

Updated 23 July 2024

Lack of freshwater, sanitation hindering human capital development, Saudi minister warns 

RIYADH: Inadequate freshwater and sanitation services are hindering human capital development, warned the Saudi Minister of Economy and Planning at the G20 Development Ministerial Meeting.

Faisal Al-Ibrahim made the comments during the “Ensuring Access to Water and Sanitation” session on the sidelines of the event, which is being held from July 22 to 24 in Rio de Janeiro, Brazil.

“Water inaccessibility places significant constraints on agriculture, impacting global food security and leading to increased human conflict due to scarcity in resources,” Al-Ibrahim said.

Saudi Arabia has demonstrated a strong commitment to addressing global water issues and advancing sustainable solutions. In September 2023, Crown Prince Mohammed bin Salman announced the establishment of a Riyadh-based global water organization to bolster efforts in tackling water challenges.

Saudi Arabia and Turkiye advance industrial and mining cooperation

Updated 23 July 2024

Saudi Arabia and Turkiye advance industrial and mining cooperation

RIYADH: ​​Saudi Arabia and Turkiye are working to enhance cooperation in the industrial and mining sectors following recent high-level meetings.

To boost trade and non-oil exports while attracting high-quality investments, the Kingdom’s Deputy Minister of Industry and Mineral Resources for Industrial Affairs Khalil bin Salamah explored promising investment opportunities and joint industrial capacity building during his official visit to Turkiye.

Accompanied by several Saudi private sector officials, this visit follows up on discussions initiated by the Minister of Industry and Mineral Resources Bandar Alkhorayef, during his official visit to the country in August 2023. 

The discussions aimed to enhance joint efforts in the industrial and mining sectors, increase trade and non-oil exports, and attract quality investments in these sectors.

The volume of trade between Saudi Arabia and Turkiye reached $6.8 billion in 2023, while Saudi firms have made an investment of over $2 billion in Turkiye, according to the West Asian country’s Trade Minister Mehmet Mus. 

Turkiye expects bilateral trade with the Kingdom to reach $10 billion in the coming years, the Turkish official said during the Saudi-Turkish Business Forum in Riyadh in March 2023.

As part of this month’s visit, which builds on ongoing efforts to develop industrial partnerships with Turkiye, Salamah met with the President of the Defense Industry Agency Haluk Gorgun and the Deputy Secretary-General of the Turkish Exporters Assembly Gokhan Yuceer, in the presence of the Saudi Ambassador to Turkiye, Fahd bin Asaad Abu Al-Nasr.

The deputy minister also chaired a roundtable meeting between Saudi and Turkish representatives at the Foreign Economic Relations Turkish Board to discuss industrial and commercial cooperation opportunities. The meeting was attended by numerous representatives from Turkish companies, according to the Saudi Press Agency.

Salamah’s visit included stops in several Turkish cities, such as Ankara, Eskisehir, and Istanbul. He toured various private sector companies and institutions, including ASELSAN, Roketsan and Turkish Aerospace as well as TEI, TEI Metal, and TEI Alloys, and visited the Middle East Technical University. 

During these visits, he held bilateral meetings to review unique investment opportunities in the industrial and mining sectors and discussed building industrial and knowledge capacities.

In Istanbul, Salamah also met with Saudi students studying in Turkiye in the presence of Faisal Osrs, the cultural attache at the Kingdom’s Embassy in Ankara.

Earlier this month, Turkish President Recep Erdogan received Saudi Foreign Minister Prince Faisal bin Farhan in Istanbul on an official visit to strengthen bilateral relations between the Kingdom and Turkiye, SPA reported. 

They also discussed regional developments and efforts to ensure stability in the region. The meeting between Prince Faisal and the Turkish president was also attended by the Undersecretary of the Ministry of Foreign Affairs for Political Affairs Saud Al-Sati, and the Saudi ambassador to Turkiye Fahad Abu Al-Nasr. 

During his visit, Prince Faisal also met with his Turkish counterpart Hakan Fidan, who said in a press conference that Saudi-Turkish relations were witnessing remarkable progress in all political, economic, and security fields.