Economy shows momentum as coronavirus cases taper off
Manufacturing output to be stronger in next quarter
Pakistan is showing signs of business activity picking up at a faster clip, as worries about new coronavirus infections fade in an economy that contracted for the first time in seven decades.
Evidence of momentum returning can be seen from growing cement-to-fuel sales and demand for home appliances to cars. That’s happening even as Pakistan added fewer than 2,900 cases last week compared with almost 35,000 cases in a week in June, and 96 per cent of the total 300,000 infected have fully recovered.
“It has surprised everybody,” said Muzzammil Aslam, chief executive officer at Tangent Capital Advisors Pvt., who expects economic expansion at 4-5 per cent in the year started July, higher than the government’s 2.1 per cent target. “The growth is led by an aggregate demand push.”
Cement sales rose 38% from a year ago to 4.8 million tons in July, and near a record level seen in October. A government programme to give amnesty to tax evaders, provided they fund construction projects, is expected to fuel activity as work resumes after the lockdown.
“We expect dispatches to continue their rising run moving forward because of tax measures,” said Saad
Khan, research head at IGI Securities Ltd. Manufacturing output improved for a second consecutive month in June. The overall recovery in largescale manufacturing will likely be stronger in the Octoberto-December quarter with worldwide demand picking up, said Khaqan Najeeb, a former adviser to Pakistan’s finance ministry. Home appliances are also seeing “robust demand,” said Haroon Ahmad Khan, chief executive officer at Waves Singer Pakistan Ltd.