Elaborating on its not-so-pleasing outlook on the economy, Crisil said private consumption demand, which has been the bulwark of growth for the last few decades, grew by a pale 3.1 per cent in the first quarter as against 7.2 per cent growth in the preceding quarter.
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Describing the slowdown as "deeper and more broad-based than suspected", domestic rating agency Crisil on Wednesday sharply slashed its GDP forecast for FY20 to 6.3 per cent from 6.9 per cent earlier.
The downward review comes days after GDP growth slowed down to a 25-quarter low of 5 per cent in the June quarter, which significantly is even lower than Pakistan’s 5.4 per cent growth and is due to the slump in private consumption and a near stalling of manufacturing activities, the agency said in a note.
The expected growth is based on the assumption of a pick-up from the second quarter due to low base effect and more importantly, if the economy can maintain the same speed through the rest of the year, the note said.
"We expect growth to get some lift from the low base effect of 6.3 per cent in the second half of the FY19," it said.
Other factors, including easing monetary policy with faster transmission and also consumption getting a boost from the farmers following the minimum income support scheme, will also help revive growth, it said.
Having set an ambitious target of nearly doubling the economy to $ 5 trillion over the next five years, the government has taken some measures, including easing foreign investment norms in select sectors, early recapitalisation of the nearly crippled state-run banks and also clearing vendor payments on time.
But the Crisil note says these moves will at best address some "pain points" apart from supporting the sentiment.
Elaborating on its not-so-pleasing outlook on the economy, Crisil said private consumption demand, which has been the bulwark of growth for the last few decades, grew by a pale 3.1 per cent in the first quarter as against 7.2 per cent growth in the preceding quarter.
Consumption slowdown can be due to income slowdown and also due to cost increases, it said, adding apart from these, there are sectoral handicaps in the auto and realty sectors.
On the manufacturing side, it said July and August have had lower purchasing managers' index scores than the same for the first quarter.
In what only aggravates the problems, it said export growth has nearly halved to 5.7 per cent in Q1 from 10.6 per cent in the previous quarter, while the government consumption has also slowed to 8.8 per cent from 13.1 per cent.
