Construction Development News

The Construction Sector of Pakistan is Likely to Rise 92% in the Next 7 Years

The Construction Sector of Pakistan is Likely to Rise 92% in the Next 7 Years

KARACHI: The construction sector is expected to grow by a staggering 92 percent in the next seven years from Rs. 1,409 billion in FY2021 to Rs. 2,706 billion by FY2029, at an annual rate of 11.8 percent, especially on the power of infrastructure and housing projects.

According to a study released by PACRA (Pakistan Credit Rating Agency), the sector’s contribution to Pakistan’s Gross Domestic Product (GDP) in FY2021 stood at Rs. 1,409 billion, which corresponded to Rs. 1,231 billion in FY2020.

In FY2021, it reported a growth of 14.4 percent year-on-year, while its contribution to GDP fell from 3.2 percent in FY2019 to 2.8 percent in the last fiscal.

Yet, construction activity during FY2021 improved by 14.4 percent in the industrial sector, driven by expanded government settlements and confrontational private sector investment.

Gross fixed capital formation (GFCF) in the private sector increased by 6.6 percent between FY2020 and FY2021. Private sector GFCF amounted to over 72 percent of the total.

In the first eight months of the fiscal year 2022, construction financing stood at Rs. 211 billion after recording a growth of 70 percent year on year.

The construction sector grips 7.61 percent of the total labor power and also delivers stimulation to over 42 ancillary sectors including steel, cement, bricks, aluminum, cables, fixtures, glass, kitchen and bathroom fittings, marble, paint, ceramic tiles, transportation, warehousing, and wood.

The major drivers of demand in the construction sector are Public Sector Development Program (PSDP) spending on uplift projects, pursued by private investments.

The plurality of the construction revenue comes from the government contracts going from buildings of infrastructure to highways etc. With the launch of CPEC, construction sector action has picked up the speed. In expansion, the government relief packages and subsidies are also pushing for further development in the industry.

The construction of private and residential buildings and housing units is also a major mover of the sector, particularly in the rural areas. The request for residential homes is steadily increasing with the population.

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