Gross domestic product growth did not exceed 0.3%, while the agriculture, industrial production and export sectors fell short of their targets.
Pakistan’s economy is suffering from a balance of payments crisis as it attempts to repay high levels of external debt, while months of political chaos have deterred potential foreign investment.
Inflation escalated, the value of the rupee fell, and the country was no longer able to import, causing the industry to decline significantly.
Pakistan has been hit by floods caused by unprecedented monsoon rains last year that inundated around a third of its land, destroying large swaths of farmland and displacing tens of millions of people.
Pakistan’s ranking in the world economic ranking of countries has fallen from 24th place in 2017 to 47th today, Finance Minister Ishaq Dar said at a press conference to announce the research results.
“It shows the reality of the situation,” he added.
These pessimistic figures give the government, which is suffering from a cash crisis, little room to introduce populist measures that attract voters in the next budget on Friday, before the elections scheduled for October.
The government is also under massive pressure from the International Monetary Fund to tighten budget constraints to release a final tranche of a vital bailout package.
Under the terms of the International Monetary Fund, Pakistan was to end subsidies in energy and other sectors, allow the rupee to float against the US dollar, raise taxes and fees, and restrict imports.
“It was very difficult for the government to implement such drastic reforms and we suffered a political cost,” Minister Dar said.
“We have so far avoided a default that was imminent,” he added.
Pakistan’s leading economic indicators for the year ending June 30, 2023 show economic growth slowed to 0.29% from 6.1% the previous year.
Agriculture, a major driver of the economy, recorded growth of only 1.55%, while the industrial sector recorded negative growth of 2.94%.
“It was the year of force majeure,” Planning Minister Ahsan Iqbal said, adding that the floods had caused the greatest repercussions.
Pakistan is expected to set a growth target of 3.5% for the next fiscal year, which will be announced in the national budget on Friday.
The IMF set a less ambitious target of 2% in its latest World Economic Outlook released earlier this week.
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