Pakistan’s economy is in a good shape and on the path to growth. Exports have started to recover in the second half of FY17 and this trend is expected to continue in the current fiscal year. In other economic indicators, Foreign Direct Investment (FDI), Workers Remittance, and overall Gross Domestic Production (GDP) are all showing progress when it comes to Pakistan’s economy.
This was stated by Governor State Bank Of Pakistan (SBP) Tariq Bajwa while he was addressing a delegation at the Pakistan Business Council that had called on him and the senior management at SBP’s headquarters today.
Tariq Bajwa said that exports have shown positive growth during the last six months. 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.
Governor SBP said that the data pertaining to the 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 added.
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 the 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 accommodating monetary policy has played a key role in providing the 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, 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,” Bajwa added.
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 Pakistan, agriculture is a low productivity area, and SBP is doing whatever it takes to improve that. The agriculture sector is now specifically focused on the availability of pesticides and fertilizers.”