SBP Governor meets Pakistan Business Council; highlights positive indicators in economy

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KARACHI, Sept 15 (APP): The Governor of State Bank of Pakistan (SBP) Tariq Bajwa has said that recovery in exports that started in the second half of the fiscal year 2017 (FY17) and continued in the current fiscal year bodes well for country’s economy.
`Exports have shown positive growth during the last six months’, he elaborated.
In fact, during the last three months, exports have grown by 13.2 percent, which shows that the decline in exports seems to have finally reversed.
He was talking to a delegation of Pakistan Business Council that called on him and the senior management at SBP headquarters on Friday.
Governor SBP said the data of first two months of the current year points to recovery in key external indicators, particularly remittances, exports and FDI.
`Workers’ remittances grew by 13.2 percent to US$ 3.5
billion in Jul-Aug 2017 and inflows from all major corridors were
higher as compared to Jul-Aug 2016.
Bajwa elaborated that the country’s economy is increasingly
becoming attractive for investment with continuation of
supportive economic policies.
`I believe at this juncture, it offers a lot of
opportunities for businesses to grow and expand’, he said.
The Governor said that the pace of expansion in the economy
accelerated for the third consecutive year in FY17 amid improving
security situation and better energy supply. It grew by 5.3
percent in FY17, compared to 4.6 percent last year. The growth
was not only the highest during last ten years but also
broad-based.
All the three major sectors- agriculture, industry, and
services, contributed to acceleration in growth.
Bajwa pointed out that the accommodative monetary policy has
played a key role in providing boost to private sector credit
demand. Policy Rate has come down from 10 percent in October
2014 to only 5.75 percent. Historic low interest rates were
instrumental in taking the private credit growth of 16.8 percent
in FY17, over and above 11.2 percent a year ago.
The overall expansion in private credit stood at Rs 747.9
billion during FY17. `Remarkably’, said the Governor, `About 40
percent of the expansion in credit was meant for fixed
investment’.
On the supply side, a healthy deposit growth improved the
liquidity of the banking system.
The latest data shows the trends in private sector are
continuing in FY18. A much lower net retirement in private sector
credit of Rs 75.5 billion from July 1st to September 1st 2017
compared to a net retirement of Rs 224.3 billion in the
corresponding period last year indicates that private sector has
borrowed more credit during FY18 so far.
This with a robust growth of 40% in import of machinery
group in 2016-17 augurs well for future growth.
`In terms of agriculture’, said the Governor, `We are a low
productivity economy and SBP is doing whatever it takes to
improve that’. Availability of credit is one aspect. Government
had set a target of Rs.1001 m but that was a broad target. Though
the last year target was largely met, but the number of borrowers
has actually gone down.
It implies that the money was going towards processing but
it was not going towards production. The Governor said that
agriculture sector is now specifically focused with availability
of pesticides and fertilizers.
He said that the SBP is also contacting private sector for
agricultural extension services in order to boost productivity.
Prior to Governor’s address, Ehsan Malik, Chief Executive
Officer, Pakistan Business Council, spoke on contribution of
members of the council which includes 24 of the largest
multinational corporations from 12 foreign countries.
Malik informed the participants that listed market value of
the member companies has reached Rs 8.4 trillion and that in
addition to contributing to Pakistan’s GDP, exports and taxes
significantly, these companies provide 400,000 direct jobs and
2.0 million indirect jobs.
He stressed that Pakistan Business Council advocates
national consensus around a `Priority Pakistan’ approach as the
member companies are involved in manufacturing and services
sector.
The delegation apprised the Governor issues being faced by
the business community. The Governor keenly listened to their
issues and ensured their timely resolution.
The Governor reiterated that economic conditions
in the country continue to remain favorable and offer unique
opportunity for businesses to grow and expand and take their role
by participating as an economic agent to serve the country in its
best interest.