The economic meltdown.

Byline: Khaleeq Kiani

The economy is facing one of the most challenging years in history. It braved many boom-and-bust cycles, but the national economic output, measured by gross domestic product (GDP), never turned negative since 1951-52.

As we conclude the fiscal year on June 30, the economy is officially estimated to have contracted about 0.4 per cent against a growth target of 3.3pc. This is, however, far better performance in view of the doomsday scenarios projected by the lenders' community until a couple of weeks ago.

All the targets for the real economy were missed this year by a wide margin. In fact, most of the indicators have gone in the opposite direction. The slide is quite steep when seen against the backdrop of 5.8pc growth just two years ago.

GDP itself is now valued at around $265 billion compared to $280bn last year and $313bn at the end of 2017-18. The assessment of economic performance by the National Accounts Committee is based on the actual output data for the first three quarters along with the Covid-19 impact in the fourth quarter.

The per-capita income is estimated to have come down to $1,270 this year from $1,360 last year and about $1,650 in the year before, showing a cumulative decline of almost 23pc. Tax revenues are estimated to face an almost 30pc shortfall against the budgeted target while the fiscal deficit will likely be in double digits.

The total investment-to-GDP ratio has been estimated for 2019-20 at 15.4pc against the target of 15.8pc, but unchanged from the last year's level of 15.4pc, revised to 15.6pc. The fixed investment-to-GDP ratio is 13.8pc for the current year against the 14.2pc target - again, unchanged from last year's 13.8pc.

Provisional data shows all major sectors missed their growth targets this year. While agriculture remained in the positive zone, industry and services posted negative growth

Public-sector investment has been calculated at 3.8pc of GDP based on budget allocations for the development programme against the target of 4.1pc and is expected to significantly come down when actualised on the basis of the reduced utilisation in the wake of lockdowns.

On the other hand, the national savings-to-GDP ratio has surpassed its 13pc target and touched 13.9pc, higher than 11.1pc of GDP last year, apparently because of a significant reduction in the current account deficit that nosedived almost 75pc to $2.78bn in the first nine months of 2019-20. This was mainly because of an increase...