ISLAMABAD: Despite challenges faced on domestic and external fronts, particularly in the wake of the second wave of Covid-19, the key macroeconomic indicators have shown strong performance, Federal Minister for Economic Affairs, Makhdum Khusro Bakhtyar said on Sunday.
“The key economic indicators are showing strong performance despite challenges posed by the second wave of Covid-19 and depressed economic conditions that encircled globally,” he said.
In a detailed statement on the state of the economy, the minister said that the current account imbalances inherited from the previous government stood firmly addressed while the economic performance was remarkable in the context of sharp growth contraction worldwide.
He said that the government was confident that the Gross Domestic Product (GDP) would even surpass the growth target by June 2021, setting the stage for much higher growth the following year.
The economy is expected to maintain this strong momentum and gather more steam going forward, he said and attributed the economic turnaround to the performance of different economic sectors.
He further said that the Current Account Balance (CAD) for the first 4 months of the fiscal year 2020-21 registered a surplus of US$1.2 billion as against a deficit of US$1.4 billion in the same period of last year, adding this strong performance of current account balance was achieved after 17-years.
The worker’s remittances during the first four months of FY2020-21 stood at $9.4 billion as against $7.5 billion of the last year, the minister said.
The workers’ remittances registered a strong growth of 26.5 per cent which augurs well for the external account stability. Such excellent growth in workers remittances has been achieved by a combination of policy measures that include anti-money laundering regulations and incentives for the promotion of financial transactions through the formal banking system.
The Foreign Direct Investment (FDI) has witnessed a 150 per cent YoY Increase in October 2021. FDI during October 2020 was $317 million as compared with $126 million recorded in the same months last year.
An increase in FDI reflects the return confidence of international investors and growing optimism about the economic future of the country.
The minister said that the Largescale Manufacturing (LSM) continued to rebound, expanding by 4.8 per cent in FY21 Q1, against a contraction of 5.5 per cent in the same quarter last year.
Evidence of momentum returning could be seen from growing production of cement, textile, automobile and home appliances, he said. Growth in LSM is largely supported by PM’s package for the construction industry and special measures announced by the government for the industrial sector to fend off additional costs caused by Covid-19.
The Federal Board of Revenue (FBR), he added, had also achieved the target of revenues by collecting Rs1.69 trillion during the July-November period of the current fiscal year against the target of Rs1.67 trillion. The revenue collection is higher by Rs69 billion or 4.2 per cent as compared to Rs1.62 trillion collected in the same period of last fiscal year.
The pace of inflation has further eased to 8.3 per cent in November 2020 while the average inflation rate in the first five months of the current fiscal year stood at 8.8 per cent.
The official External Inflows during the first 4 months of FY2020-21 were recorded at $3.2 billion as against $2.5 billion the same quarter last year. This 28 per cent increase in external inflows would help strengthen the forex reserves.
The minister said Foreign Exchange Reserves held with the State Bank of Pakistan (SBP) increased to $13.11 billion as against $8.24 billion in the corresponding period of last year, showing a growth of 59 per cent.
Improved forex reserves would further stabilize the exchange rate and build a buffer against any external shocks, he added.
Pakistani Rupee has shown strong performance as it appreciated about 4.9 per cent in the last five months and was declared the third best-performing currency in Asia.
He said that the country’s external account stability was supported by major improvements in key economic indicators and confidence of international financial markets.
Looking ahead, the government’s planned external inflows were more than sufficient to cover upcoming payments.
The recent announcement by G-20 for the second round of debt relief coupled with favorable capital market conditions for the launch of a sovereign transaction and enhanced inflows on account of improvements in trade, remittances and FDI will give further strength to the external account position of the country.
During a recent meeting of the Board of Directors, Asian Development Bank (ADB) management had also acknowledged that the government’s ongoing efforts to ensure stability have started showing encouraging results despite the Covid-19 challenge.
The bank disbursed $300 million on December 4 for budgetary support under Trade & Competitiveness Program which reflects international financial institutions’ confidence in the government’s reform agenda for sustainable growth.
The minister stated that despite the challenges posed by the second wave of Covid-19, Pakistan’s macroeconomic indicators were showing resilience and strong performance viz-a-viz the regional economies.
This remarkable economic resilience and rebound was reflective of the hard work of the Pakistan Tehreek-e-Insaf (PTI) government and economic management under Prime Minister Imran Khan’s leadership.
He expressed the hope that things on the economic horizon would largely remain in favour of the country in the coming months.