Pakistan shows significant signs of economic recovery: Outlook

With significant signs of economic recovery, the government would continue to follow the positive reforms momentum to boost the competitiveness of the country's economy and lay a strong foundation for a more robust, inclusive and sustainable recovery.

"Pakistan has shown significant signs of economic recovery with fast resumption of economic dynamism," according to the monthly Economic Update and Outlook for June 2021.

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

"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 boost the competitiveness of Pakistan's economy and lay a strong foundation for a more robust, inclusive and sustainable recovery," it said.

The rebound in the economic activity is expected to continue in the coming months on account of reopening of economic activities and acceleration in Covid-related vaccination process, the report said.

The recent economic recovery (real GDP growth 3.94 per cent in FY 2021) and the government measures for inclusive and sustainable growth has built investors' confidence.

"It is expected that [the] economy will keep its trajectory of higher growth without any macroeconomic imbalances," it said.

Meanwhile, giving details about the performance of various sectors of the economy, the reports said, largescale manufacturing has surpassed its pre-Covid level during July-April FY 2021 and clocked its 15-year high growth rate of 12.8 per cent, compared with the 8.7 per cent slump last year. In April FY 2021, LSM witnessed 68 per cent growth on YoY basis.

The Consumer Price Index (CPI) inflation decelerated to 10.9 per cent in May 2021, compared to 11.1 per cent in the previous month due to a fall in fuel, electricity and food prices.

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

The weekly Sensitive Price Indicator (SPI), which captures the price movement of 51 essential items, recorded an increase of 0.28 per cent for the week ended June 17, 2021, after three weeks of consecutive decline.

Meanwhile, a significant growth in tax revenues and prudent expenditure management resulted in better fiscal performance during the first 10 months of the current fiscal year, the report said.

The net provisional tax collection grew 17.5 per cent to Rs4.170 trillion, compared with Rs3.549 trillion in the corresponding period of the last year. The net collection has exceeded the target of Rs3.994 trillion by Rs176 billion. During the period under review, the domestic tax collection grew 17.3 per cent, while the revenues from the Customs duty increased 18.7 per cent.

The report also said on account of 29.4 per cent growth in the workers' remittances and 10.3 per cent growth in exports, the current account posted a surplus of $153 million (0.1 per cent of GDP) for JulyMay FY 2021.

The exports were recorded at $2.1 billion in

May 2021 ($1.2 billion last year); thus, posting a growth of 69 per cent YoY basis.

In July-May FY 2021, the foreign direct investment was recorded at $1.751 billion, compared with $2.422 billion last year, while the total foreign portfolio investment registered an inflow of $2.172 billion during JulyMay FY 2021, according to the Outlook.

In July-May FY 2021, the remittances rose to $ 26.7 billion, compared with $20.6 billion last year, showing a growth of 29.4 per cent. The remittances were recorded at $2.5 billion in May 2021, ($1.8 billion in May 2020), showing an increase of 33.5 per cent on a year-on-year basis. The workers' remittances remained over $2 billion for 12 consecutive months.

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

The report also showed that there has been a remarkable growth in the Pakistan Stock Exchange in May 2021.