ISLAMABAD: The Investment-to-GDP ratio will likely increase from 13.6% in 2022-23 to 15.1% during the next financial year (2023-24) due to stabilization and political stability.
Fixed investment is likely to grow by 40.5% on a nominal basis, whereas, as a percentage of GDP is likely to increase from 11.9% in 2022-23 to 13.4% in 2023-24.
Similarly, the national savings rate is set at 13.4% of GDP, according to the official data.
During the outgoing financial year (2022-23), the investment-to-GDP ratio fell from 15.7% in 2021-22 to 13.6% in 2022-23, with a fall in both private and public investment-to-GDP ratios.
Investment grew by 10.2% in nominal terms. However, it fell by 15.4% in real terms, mainly due to high inflation. Both public and private investment went up in nominal and dropped in real terms.
The National savings are expected to increase to 12.5% of GDP in 2022-23 from 11.1% in 2021-22 mainly due to the lower availability of foreign savings because of massive improvement in the current account deficit.
Pakistan’s dependence on external borrowing to finance investment
Pakistan’s dependence on external borrowing to finance investment has reduced marginally, as per to the official document.
The effectiveness of import compression steps is evident from a surged level of domestic savings which went up to 6.2% of GDP from 4.3% last year.
Private consumption went up by 24.8% in nominal terms and 1.6% in real terms during 2022-23. Private consumption occupied a big share in expenditure on GDP and added positively to GDP growth.
In addition, net exports increased as the fall in imports outpaced the drop-in exports.
