The Asian Development Bank has projected a 2.5 per cent growth in Pakistan’s economy for the current fiscal year ending in June. Although the State Bank of Pakistan has retained its earlier forecast of 2.5pc to 3.5pc, the continued lag in domestic aggregate demand makes the lower end of the range appear more realistic.

The sluggish pace of demand is evident from the tanking of consumer inflation to a 60-year low of 0.7pc in March, the negative growth in large-scale manufacturing and lower-than-expected tax revenues.

Traders have reported, and consumers have confirmed, that Eid-related sales this year were significantly weaker compared to last year — another indicator of faltering domestic demand, which remains insufficient to push economic growth beyond 2.5pc.

What merits deeper analysis is: if the economy grows at 2.5pc — below the initial 3.6pc target set by the hybrid government — which sectors will underperform, and what will be the implications for employment and real incomes?

With industries set to grow far below expectations, suppressed demand appears inevitable

The 3.6pc growth target was based on expectations that the industrial and services sectors would expand by 4.4pc and 4.1pc, respectively, while agriculture was forecast to grow just 2pc due to a high base effect from the 6.2pc increase in FY24.........

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