Economy showing signs of recovery
SBP governor says reforms initiated earlier help country fight pandemic
KARACHI:
Pakistan’s economy is showing early signs of slow recovery from the negative impact of the coronavirus pandemic. The economic reforms initiated in June 2019 enabled the country to firmly fight against Covid-19 crisis otherwise the situation would have been worse.
The country still has the economic depth to continue to support people, businesses and economic activities which got impacted in response to the lockdown imposed to contain the virus. The global health crisis has just delayed economic reforms, but not derailed them, said State Bank of Pakistan (SBP) Governor Reza Baqir.
He was speaking at a webinar on ‘Pakistan economy post-Covid-19; the central bank perspective’ organised by the Institute of Chartered Accountants of Pakistan on Wednesday.
“Cross country growth comparison suggests…Pakistan’s (economic) outlook is relatively more resilient compared to many other countries,” he said.
He said that Google’s community mobility report for Pakistan of May 25 suggests that growth of retail and recreation, grocery and pharmacy, parks, transit stations and workplaces had declined 60% in response to Covid-19. However, the graph showed they are now on a recovery path, according to his presentation.
The Pakistan Stock Exchange (PSX), which had dropped in March when the government imposed lockdown, remains on the path to recovery. The KSE-100 Index, a barometer to gauge economic performance, remained ahead of Morgan Stanley Capital International (MSCI) Equity Indices AEs and MSCI Equity indices EMEs, he compared.
“Looking ahead, Covid-19 developments have delayed, not derailed the recovery process. The pre-Covid-19 improvement in fundaments, the prudent policy response during Covid-19, and fully-funded external and fiscal positions support resilience - they leave Pakistan well-placed to recover post lockdowns.”
The measures taken by the central bank has provided relief worth around Rs1 trillion to people and the businesses, he added.
The bank introduced subsidised credit to all businesses, provided subsidised loans for salaries to the businesses agreed not to layoff worker for three months. Besides, the central bank rescheduled loans acquired by people for one year. “95% of the beneficiaries are of small loan borrowers,” he said.
“This (Rs1 trillion relief by SBP) is on top of the Rs1.2 trillion package which the government announced,” he clarified.
The June 2019 reforms helped to improve the country foreign currency reserves by more than $10 billion by the time Covid-19 emerged.
“If this significant improvement had not taken place and if Covid-19 would emerge in June when our net (buffer reserves) position was zero – so our situation would have been hugely worse than at present. We had come down on our knees,” he commented.
“If we think the Covid-19 has brought us on knees then we would have been buried under the ground if the reserves had not improved,” he vocalised. The International Monetary Fund (IMF) world economic outlook suggests Pakistan’s gross domestic product (GDP) would not affect as badly as of many others in the emerging markets. “Our growth reduction is comparatively lower than the others. We are better off than many other countries coping with Covid-19,” he claimed.
He stated the country is having more resources than the one required to pay off external debt.
“Our requirements are less than the available sources that we have. Therefore, we are quite confident our external position is well funded,” he said.
Published in The Express Tribune, June 4th, 2020.
Pakistan’s economy is showing early signs of slow recovery from the negative impact of the coronavirus pandemic. The economic reforms initiated in June 2019 enabled the country to firmly fight against Covid-19 crisis otherwise the situation would have been worse.
The country still has the economic depth to continue to support people, businesses and economic activities which got impacted in response to the lockdown imposed to contain the virus. The global health crisis has just delayed economic reforms, but not derailed them, said State Bank of Pakistan (SBP) Governor Reza Baqir.
He was speaking at a webinar on ‘Pakistan economy post-Covid-19; the central bank perspective’ organised by the Institute of Chartered Accountants of Pakistan on Wednesday.
“Cross country growth comparison suggests…Pakistan’s (economic) outlook is relatively more resilient compared to many other countries,” he said.
He said that Google’s community mobility report for Pakistan of May 25 suggests that growth of retail and recreation, grocery and pharmacy, parks, transit stations and workplaces had declined 60% in response to Covid-19. However, the graph showed they are now on a recovery path, according to his presentation.
The Pakistan Stock Exchange (PSX), which had dropped in March when the government imposed lockdown, remains on the path to recovery. The KSE-100 Index, a barometer to gauge economic performance, remained ahead of Morgan Stanley Capital International (MSCI) Equity Indices AEs and MSCI Equity indices EMEs, he compared.
“Looking ahead, Covid-19 developments have delayed, not derailed the recovery process. The pre-Covid-19 improvement in fundaments, the prudent policy response during Covid-19, and fully-funded external and fiscal positions support resilience - they leave Pakistan well-placed to recover post lockdowns.”
The measures taken by the central bank has provided relief worth around Rs1 trillion to people and the businesses, he added.
The bank introduced subsidised credit to all businesses, provided subsidised loans for salaries to the businesses agreed not to layoff worker for three months. Besides, the central bank rescheduled loans acquired by people for one year. “95% of the beneficiaries are of small loan borrowers,” he said.
“This (Rs1 trillion relief by SBP) is on top of the Rs1.2 trillion package which the government announced,” he clarified.
The June 2019 reforms helped to improve the country foreign currency reserves by more than $10 billion by the time Covid-19 emerged.
“If this significant improvement had not taken place and if Covid-19 would emerge in June when our net (buffer reserves) position was zero – so our situation would have been hugely worse than at present. We had come down on our knees,” he commented.
“If we think the Covid-19 has brought us on knees then we would have been buried under the ground if the reserves had not improved,” he vocalised. The International Monetary Fund (IMF) world economic outlook suggests Pakistan’s gross domestic product (GDP) would not affect as badly as of many others in the emerging markets. “Our growth reduction is comparatively lower than the others. We are better off than many other countries coping with Covid-19,” he claimed.
He stated the country is having more resources than the one required to pay off external debt.
“Our requirements are less than the available sources that we have. Therefore, we are quite confident our external position is well funded,” he said.
Published in The Express Tribune, June 4th, 2020.