Momentum continues to lay strong foundation for economic growth: Outlook  

Momentum continues to lay strong foundation for economic growth: Outlook  ISLAMABAD, Jun 29 (APP): With significant signs of economic  recovery, the government would continue to follow the positive reform momentum to boost the competitiveness of country’s economy and lay a strong foundation for a more robust, inclusive and sustainable recovery.

“Pakistan economy has shown significant signs of economic recovery with fast resumption of economic dynamism,” says the monthly Economic Update and Outlook for June 2021.

According to the report, the government had introduced comprehensive measures to ensure sustainable growth.

“In recent budget 2021-22, government has taken growth-oriented initiatives and will continue to follow the positive reform momentum which will help to boost the competitiveness of Pakistan’s economy and lay a strong foundation for a more robust, inclusive and sustainable recovery,” it adds.

According to the report, the rebound in economic activity is expected to continue in coming months on account of reopening of economic activities and acceleration in vaccination process.

It says, the recent economic recovery (real GDP growth 3.94 percent in FY 2021) and government measures for inclusive and sustainable growth has built investor confidence.

“It is expected that economy will keep its trajectory of higher growth without any macroeconomic imbalances,” it adds.

Meanwhile giving details about the performance of various sectors of economy, the reports adds, the large scale manufacturing has surpassed its pre-COVID level during July-April FY 2021 and clocked its fifteen-year high growth rate of 12.8 percent as compared to 8.7 percent slump last year. In April FY 2021, LSM witnessed 68 percent growth on YoY basis.

On the other hand, the CPI inflation decelerated to 10.9 percent in May 2021 compared to 11.1 percent in the previous month due to a fall in fuel, electricity and food prices.

During July-May FY 2021, consumer inflation was recorded at 8.8 percent compared to 10.9 percent in the corresponding period a year earlier. The supply related measures taken by the government along with strict monitoring and checks by administration kept the prices in check all over the country.

The weekly SPI which captures the price movement of 51 essential items recorded an increase of 0.28 percent for the week ended on 17 June, 2021, after three weeks of consecutive decline.

Meanwhile, significant growth in tax revenues and prudent expenditure management resulted in better fiscal performance during the first ten months of current fiscal year.

The fiscal deficit during July-April, FY2021 has been reduced to 4.2 percent of GDP (Rs 2020 billion) from 5.3 percent of GDP (Rs.2222 billion) in the corresponding period of last year.

The primary balance continue to remain in surplus and recorded at Rs 159 billion (0.3 percent of GDP) against the deficit of Rs 205 billion (0.5 percent of GDP) last year.

On the other hand, the net provisional tax collection grew by 17.5 percent to Rs 4,170 billion as compared to Rs 3,549 billion in the comparable period of last year. The net collection has exceeded the target of Rs 3,994 billion by Rs 176 billion. During the period under review, the domestic tax collection grew by 17.3 percent while revenues from customs duty increased by 18.7 percent.

On account of 29.4 percent growth in Workers’ Remittances and 10.3 percent growth in Exports, the Current Account posted a surplus of $ 153 million (0.1 percent of GDP) for July-May FY2021.

The exports were recorded $ 2.1 billion in May 2021 ($ 1.2 billion last year) thus posting a growth of 69.0 percent YoY basis.

In July-May FY2021, Foreign Direct Investment was recorded at $ 1,751.7 million compared to $ 2,422.7 million last year, while total foreign portfolio investment registered an inflow of $ 2,172.9 million during July-May FY2021.

In July-May FY2021, remittances rose to $ 26.7 billion compared to $ 20.6 billion last year, with a growth of 29.4 percent.

Remittances recorded $2.5 billion in May 2021, ($ 1.8 billion in May 2020) showing an increase of 33.5 percent on a YoY basis. Workers’ remittances remained above $ 2.0 billion for twelve consecutive months.

Pakistan’s total liquid foreign exchange reserves increased to $23.6 billion on Jun, 11 2021. After July 5, 2017, the State Bank of Pakistan’s reserves now stood at $16.4 billion while commercial banks’ reserves remained $ 7.2 billion.

There has been remarkable growth in Pakistan stock exchange in May 2021. The KSE100 index gained 3,820 points in the month and closed at 47,896 points on 31-05-2021.

Similarly, market capitalization of the PSX increased by Rs 570 billion and closed at Rs 8,267 billion on 31-05-2021. On 27th May 2021, PSX witnessed an all-time high daily trading volume with 2.21 billion shares traded in a single session, the report added.