With significant signs of economic recovery, the government will continue to follow the positive reform momentum to boost the competitiveness of Pakistan’s economy and lay a strong foundation for a more robust, inclusive, and sustainable recovery.
This was mentioned in the monthly Economic Update and Outlook for June 2021, which highlighted that “Pakistan[‘s] economy has shown significant signs of economic recovery with fast resumption of economic dynamism”.
According to the report, the government had introduced comprehensive measures to ensure sustainable growth and detailed that:
In [the] recent budget 2021-22, [the] 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.
The report showed that the rebound in economic activity is expected to continue in the coming months, thanks to the resumption of economic activities and the acceleration of the vaccination process. Additionally, the recent economic recovery (real GDP growth 3.94 percent in FY 2021) and the government’s measures for inclusive and sustainable growth have built investor confidence.
It further read: “It is expected that economy will keep its trajectory of higher growth without any macroeconomic imbalances”.
The report also shared details about the performance of the economy’s various sectors and detailed that the large-scale manufacturing had surpassed its pre-pandemic level during July-April FY 2021 and had clocked a fifteen-year high growth rate of 12.8 percent as compared to its 8.7 percent slump last year. In April FY 2021, the LSM had had a 68 percent growth on a year-on-year (YoY) basis.
On the other hand, the CPI inflation decelerated to 10.9 percent in May 2021 as compared to 11.1 percent in the previous month due to a fall in the prices of fuel, electricity, and food.
Consumer inflation during July-May FY 2021 was recorded at 8.8 percent as compared to 10.9 percent in the corresponding period last year. The supply-related measures taken by the government along with strict monitoring and checks by the administration had kept the prices all over the country in check.
The weekly SPI that captures the price movement of 51 essential items had recorded an increase of 0.28 percent for the week that ended on 17 June 2021 after three weeks of consecutive declines.
Meanwhile, significant growths in tax revenues and prudent expenditure management resulted in better fiscal performances during the first ten months of the current fiscal year.
The fiscal deficit during July-April FY 2021 was reduced to 4.2 percent of the GDP (Rs. 2,020 billion) from 5.3 percent of the GDP (Rs. 2,222 billion) in the corresponding period last year.
The primary balance continues to remain in surplus and was recorded at Rs. 159 billion (0.3 percent of the GDP) against the deficit of Rs. 205 billion (0.5 percent of the GDP) last year.
On the other hand, the net provisional tax collection has grown by 17.5 percent to Rs. 4,170 billion as compared to Rs. 3,549 billion during the same period the previous 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 had grown by 17.3 percent while the revenues from customs duty increased by 18.7 percent.
On account of the 29.4 percent growth in the Workers’ Remittances and the 10.3 percent growth in Exports, the Current Account had posted a surplus of $153 million (0.1 percent of the GDP) for July-May FY2021.
The exports were recorded at $2.1 billion in May 2021 ($1.2 billion last year), thus posting a growth of 69.0 percent on a YoY basis.
In July-May FY 2021, the Foreign Direct Investment was recorded at $1,751.7 million against $2,422.7 million last year, while the total foreign portfolio investment registered an inflow of $ 2,172.9 million during July-May FY2021.
In July-May FY 2021, the remittances had risen to $26.7 billion as compared to $20.6 billion last year, with a growth of 29.4 percent.
The remittances recorded at $2.5 billion in May 2021, ($1.8 billion in May 2020) had shown an increase of 33.5 percent on a YoY basis, and the workers’ remittances remained above $2.0 billion for twelve consecutive months.
Pakistan’s total liquid foreign exchange reserves had increased to $23.6 billion on 11 June 2021. After 5 July 2017, the State Bank of Pakistan’s reserves stood at $16.4 billion while the commercial banks’ reserves remained at $7.2 billion.
There was also a remarkable growth in the Pakistan Stock Exchange (PSX) in May 2021. The KSE100 index gained 3,820 points in May and closed at 47,896 points on 31 May.
Similarly, the market capitalization of the PSX increased by Rs. 570 billion and closed at Rs. 8,267 billion on 31 May 2021. On 2 May, the PSX had an all-time high daily trading volume, with 2.21 billion shares traded in a single session, the report added.