Size of Pakistan’s economy – Gross Domestic Product (GDP) – shrank by $34 billion during the outgoing fiscal year, as its overall size dipped to $341.50bn when compared with the level of $375.4bn in 2021-22.

According to the Pakistan Economic Survey 2022-23 which would be released tomorrow (Thursday), it translated into a $198 reduction in per capita income which plunged to $1,568 against $1,766 recorded last financial year.

But the depreciation in rupee against the US dollar meant the overall volume of economy increased in terms of local currency, reaching Rs84,760bn after an increase of Rs10,678bn. It means the per capita income – in terms of rupee – also jumped to Rs388,775 in 2022-23 when compared with Rs313,337 recorded last year.

However, this spike in terms of Pakistani rupee is meaningless for the people as the rising cost of living and the resultant reduced purchasing power triggered by the record-high inflation meant that they were emptying their pockets much quicker than previous years. In fact, meeting the basic needs like food has become a challenge for many.

The document cites the ongoing Ukraine-Russia war as the main reason behind the high cereals prices in world markets, which has triggered an inflationary cycle; as a result, Pakistan witnessed 29 per cent inflation during July-March period.

The Pakistan Economic Survey is a year-ending document which is released every year a day before the presenting the federal budget. It contains official final figures for the first nine months [July-March] and provisional estimates related to the last quarter [April-June] which are finalised later.

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With the National Economic Council (NEC) approving a GDP growth rate of 0.4pc for 2022-23 and setting a target of 3.5pc for 2023-24, one can easily notice Pakistan’s inability to maintain or increase a growth rate that can meet the national needs amid a high population growth rate.

In 2017-18, the growth rate was 6.1pc which dipped to -0.94 in 2019-20. However, it witnessed a jump by 5.77pc but only after the then PTI government decided to rebase the economy. Previously, the year 2005-06 was used as a base but it was changed to 2015-16, thus benefitting, in terms of figures, from the high growth rate witnessed during the PML-N government.

This rebasing of economy did certainly improve the GDP numbers but only hid the reality, thus the critics describing the move as just a political gimmick. So the economy’s size actually shrank alarmingly from the level of $357bn in 2017-18 to $301bn in 2019-20.

It surpassed the 2017-18 level only once in 2021-22 by just $18bn to $375bn but again witnessed a decline to the level of $341.50bn this fiscal year.

The document showed that the services sector had the largest share in national economy which stood at 54pc followed by agriculture 24pc and industry 22pc.

To understand why Pakistan couldn’t achieve a sustainable and stable economy while spending a huge sum on importing food items is best illustrated by a dismal agriculture sector growth rate which ranged between 3.88pc in 2017-18 and 1.55pc in 2022-23 with an exception of 2021-22 when it surpassed the 4pc mark.

On the other hand, the manufacturing sector witnessed negative growth in twice during the last six years – -7.8 in 2019-20 and -3.91 2022-23.

These examples from the agriculture and manufacturing sectors show that Pakistan has been left with very little room to earn much-needed foreign reserves through exports. Same applies to the services sector.

But the political pressure we are facing today is perhaps best explained by a huge budget deficit – an issue that is also responsible for the harsh conditions set by the International Monetary Fund (IMF).

Hence, the easiest solution proposed by the country’s policymakers and the quickest remedy coming from the international experts is hiking the gas, electricity and fuel prices which leads us to the inflationary cycle we are witnessing.

Read more: IMF official says Pakistan must explain fuel-pricing scheme before any loan deal

In 2017-18, the budget deficit was recorded at Rs2,260bn but it swelled to Rs5,260 in 2021-22. This huge gap meant that Pakistan became more dependent to foreign assistance and influence, as explained by the ongoing IMF saga.

However, there has been a marked reduction to the level of Rs3,079 during the first nine months of the current fiscal year due to the measures taken by the coalition government.