AVN 50.85 Increased By ▲ 1.79 (3.65%)
BAFL 28.61 Increased By ▲ 0.06 (0.21%)
BOP 3.60 Decreased By ▼ -0.03 (-0.83%)
CNERGY 3.24 Decreased By ▼ -0.03 (-0.92%)
DFML 10.73 Decreased By ▼ -0.07 (-0.65%)
DGKC 52.59 Increased By ▲ 0.61 (1.17%)
EPCL 44.00 Increased By ▲ 0.40 (0.92%)
FCCL 12.45 Increased By ▲ 0.03 (0.24%)
FFL 6.20 Increased By ▲ 0.04 (0.65%)
FLYNG 5.96 Decreased By ▼ -0.03 (-0.5%)
GGL 10.30 Increased By ▲ 0.04 (0.39%)
HUBC 68.59 Increased By ▲ 0.09 (0.13%)
HUMNL 5.83 Decreased By ▼ -0.01 (-0.17%)
KAPCO 22.58 Decreased By ▼ -0.07 (-0.31%)
KEL 1.85 Increased By ▲ 0.02 (1.09%)
LOTCHEM 29.52 Increased By ▲ 0.62 (2.15%)
MLCF 28.57 Decreased By ▼ -0.13 (-0.45%)
NETSOL 80.87 Increased By ▲ 3.97 (5.16%)
OGDC 79.83 Increased By ▲ 1.43 (1.82%)
PAEL 9.71 Increased By ▲ 0.04 (0.41%)
PIBTL 4.28 Increased By ▲ 0.07 (1.66%)
PPL 61.58 Increased By ▲ 1.09 (1.8%)
PRL 14.45 Decreased By ▼ -0.03 (-0.21%)
SILK 1.11 Increased By ▲ 0.05 (4.72%)
SNGP 42.97 Increased By ▲ 0.47 (1.11%)
TELE 7.25 Increased By ▲ 0.15 (2.11%)
TPLP 13.32 Increased By ▲ 0.55 (4.31%)
TRG 98.93 Increased By ▲ 2.80 (2.91%)
UNITY 15.50 Increased By ▲ 0.27 (1.77%)
WTL 1.19 Increased By ▲ 0.01 (0.85%)
BR100 4,190 Increased By 29.8 (0.72%)
BR30 14,589 Increased By 182.3 (1.27%)
KSE100 41,904 Increased By 217.8 (0.52%)
KSE30 14,804 Increased By 61.5 (0.42%)
Pakistan

Floods could shrink Pakistan's GDP growth to 2.49% in FY23: AHL

  • Brokerage house's research wing says annual average CPI reading to hit 19.7% in FY23 against earlier estimate of 18.6%
Published August 29, 2022

Ravaged by floods, Pakistan's economic growth could shrink to 2.49% in FY23 against an earlier estimate of 2.97%, said brokerage house Arif Habib Limited (AHL). The estimates are a far cry from the originally-envisioned GDP growth target of 5% set by the government for the ongoing fiscal year.

Record-shattering rains have caused devastating floods in both the north and south of the country, affecting more than 33 million people and killing more than 1,000 while causing massive damage to the infrastructure.

Economic hit from floods in Pakistan to cost at least $10bn: Miftah Ismail

The calamity could cause “GDP growth to shrink to 2.49% in FY23 against the earlier base case assumption of 2.97%,” and a "rebound is expected next year with GDP to settle at 4.4%", added the AHL report.

“Our initial assessment suggests that these floods will debilitate the Pakistan economy with losses estimated at $5.3 billion (1.48% of the GDP),” it said.

The brokerage house noted that the primary hit will be for the housing sector, which is estimated at a mammoth $3.0 billion (0.83% of the GDP).

“This will be followed by the destruction of agricultural crops; we project a cumulative impact of $1.8 billion (0.50% of the GDP). Moreover, loss of transportation and communication (mainly road and bridges damaged) will set back the economy by $371 million (0.10% of the GDP). Whereas, perished livestock will translate to a loss of $101 million (0.03% of the GDP),” it added.

'Repercussions of $4bn': flash floods create havoc as Pakistan's economy remains under stress

Talking to Business Recorder, Tahir Abbas, Head of Research at AHL, said the impact would also trickle down to the industrial sector.

“The slowdown would remain until September,” he said.

Meanwhile, the report added nearly 3.4% of the total crop area has been declared calamity-hit, estimated to be around 2 million acres out of the total cultivated area of 59.5 million acres.

“This is a key cause of concern as agriculture contributes close to 19% to the GDP of Pakistan, employing nearly 42% of the workforce,” said the report.

Being an agricultural country, Pakistan heavily relies on monsoon rains for its crops and to replenish lakes and dams, but it can also bring destruction.

The loss in key crops could increase full-year current account deficit by $2 billion.

Recent floods to adversely affect Kharif crops, warns Pakistan's finance ministry

Moreover, the shortage of these agricultural products will cause a spike in prices, “which can take our annual average CPI reading for FY23 to 19.7% against our prevailing estimate of 18.6%”.

Furthermore, AHL expects a temporary setback in KSE-100 listed companies in terms of offtake, particularly for sectors such as cement, steel, fertilizer, automobile, and OMCs, whose sales may witness a dip this quarter.

Comments

1000 characters

Floods could shrink Pakistan's GDP growth to 2.49% in FY23: AHL

Post-budget press conference: Dar looks to pacify concerns

Sindh govt announces up to 35% raise in salaries, 17.5% hike in pension amounts

Met office warns Cyclone Biparjoy now 910km away from Karachi

Fitch does not ‘expect large further devaluation of Pakistani rupee’: report

Hina Rabbani Khar concludes two-day visit to Denmark, Finland

Dubai ranks third among top global cities, ahead of New York, London and Paris

Lahore ATC grants police two-day physical remand of Yasmin Rashid in Askari Tower attack case

Sri Lanka lifts import limits on 286 items as crisis eases

Egypt’s annual headline inflation rate speeds up to 32.7% in May

Zelensky says counteroffensive actions ‘taking place’