The investment figures for 2024-25 released by the Pakistan Bureau of Statistics (PBS) portray a truly dismal picture. They reveal a sharp downward trend in the level of investment as a % of the GDP.

The investment figures include 1.7 percent of the GDP as the build-up of inventories in the economy. The overall level of investment is reported at 13.7 percent of the GDP in 2024-25. Therefore, the level of fixed capital formation is only 12 percent.

There has been a visible long-term trend of decline in the level of fixed capital formation as % of the GDP. As far back as 2008-09 it was almost 16 percent of the GDP. By 2015-16 it had fallen to 14.2 percent of the GDP and now it stands at 12 percent of the GDP. There is a minor recovery from the level of 11.4 percent of the GDP in 2023-24, when investors faced the highest-ever level of interest rates.

There is need also to identify the trends respectively in private and public investment. The latter consists of development spending by the federal and provincial governments and investment in expansion of capacity by the State-Owned Enterprises (SOEs).

The level of private investment has fallen from almost 12 percent of the GDP in 2008-09 to 9 percent of the GDP in 2024-25. A sharper downward trend is visible in public investment. It has declined from 4 percent of the GDP in 2008-09 to 2.9 percent of the GDP. In fact, there was a year, 2017-18, when it rose to a peak of 4.7 percent of the GDP.

The sharper declining trend in public investment has led to a big change in the composition of investment in the economy. The respective shares of public and private investment are 76 percent and 24 percent in 2024-25. Earlier, in 2008-09 they were 67 percent and 33 percent.

There has been only a very modest growth in the overall level of investment at constant prices. In........

© Business Recorder