State Bank of Pakistan (SBP) Governor Yaseen Anwar has said that Pakistan holds enormous potential for economic growth and termed the economy’s resilience unparalleled which has survived two major floods, a catastrophic earthquake, war on one border and balance of payments crisis.
All this happened “without any bouts of hyperinflation, a run on bank deposits or a deep recession,” he said while speaking on the subject “The State of Pakistan’s Economy” at a seminar organised by the Management Association of Pakistan (MAP) here on Thursday.
“This only goes to show the enormous potential for growth that the country holds,” he added.
Anwar was of the view that while the economy was going through some testing times, the challenge could scarcely be classified as daunting. “Our twin deficits are the most significant challenge. Even then, it is not the size that’s the problem, it’s the situation,” he said.
Unlike many other countries, he said, the solutions to Pakistan’s problems were straightforward. These require a good measure of willpower and determination to see reforms through these interesting and challenging times.
He said despite the fiscal deficit, the debt-to-GDP ratio had not increased substantially, rather it declined in the last three years.
According to Anwar, the pace of recovery after the floods in Sindh in the early part of financial year 2011-12 reflected the resilience of economy. He said improvement in food supplies had already dampened food inflation, which had been edging down continuously. “Headline inflation has followed suit and fell to less than 10% for the first time in two years.”
Anwar expected the textile and sugar industries to do well this year and construction activity had also picked up with support from the rise in remittances, a growing population and initiation of public sector development projects.
He pointed out that growth across the real sector had been constrained significantly by energy problems. However, the government was taking steps to alleviate the problem and one such step was the debt swap to free up liquidity for companies across the energy sector.
Published in The Express Tribune, March 2nd, 2012.
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