The Finance Ministry maintained that Pakistan’s economic performance remained strong and is still on a trajectory compatible with an economic growth target of around 5 percent in the current fiscal year.
The monthly Economic Update and Outlook March 2022 released by the Ministry of Finance states that Pakistan’s economic performance remained strong and is still on a trajectory compatible with an economic growth target of around 5 percent in the current fiscal year and if this trend continues in the next months, economic growth will be driven primarily by the expansion of manufacturing capacity.
It also stated that inflation and the current account deficit are still under pressure and the government is taking measures to limit as much as possible further increases in the cost of living in the coming months.
Moreover, the government measures designed to stimulate exports and discourage unnecessary imports are expected to contribute to constraining the current account deficit.
The recent geopolitical tensions, in particular the Ukraine crisis, is the most important external risk factor. Likewise, domestic political conditions are building domestic risks.
A further escalation of these risks could hamper the positive outlook for Pakistan’s economy and may also aggravate the macroeconomic imbalances. The monthly report mentioned that the production of wheat is expected to be near the allocated target of 28.9 million tons with improved inputs availability of seeds & pesticides, irrigation water, and increased agriculture credit disbursement. Additionally, the government has increased the wheat support price from Rs 1,950 to Rs. 2,200 per 40 kg for Rabi 2021-22.
Similarly, the Large Scale Manifesting side, from July to January FY 2022, was recorded at 7.6 percent against 1.8 percent last year with car production and sales increasing by 61.6 percent and 57.5 percent, respectively.
The Ministry of Finance said that remittances have increased to $20.1billion (7.6%) in the first eight months which was $18.7 billion from July to February 2022. In addition, Exports have recorded $20.6billion (28 percent increase) whereas imports surged to $47.9 billion in eight months.
Whereas, the current account deficit (CAD) recorded $12.1billion from July to February. The report states that the total foreign investment including FDI as well as portfolio investment surged to $1.8 billion comparable to $799 million in eight months of last year. FBR revenue was recorded at Rs. 3802 billion whereas non-tax revenue and PSDP witnessed declines of 16 percent and 21 percent respectively in the first eight months.
On the other hand, the fiscal deficit also surged to Rs. 1862 billion comparable to Rs. 1309 billion from July 2021 to February 2022. The agriculture credit also witnessed an increase of 3.6 percent to Rs. 835 billion, Credit to the private sector Rs. 873.3 billion, policy rate 9.75 percent, CPI 12.2 percent, large scale manufacturing 8.2 percent.
On the flip side, the PSX index was 43,523, with a market capitalization of Rs. 7.35 trillion and 17,578 companies incorporated in the right months.
economic condition in Pakistan is the same as expected after corona pandemic. The overall economy in the world is going towards inflation, and that is really an alarming situation for the people who are already living hand to mouth.