Despite the challenges faced on the domestic and external fronts, particularly in the wake of the second wave of coronavirus, the key macroeconomic indicators have shown strong performance, Federal Minister for Economic Affairs Makhdoom Khusro Bakhtiar said on Sunday.
"The key economic indicators are showing strong performance despite the challenges posed by the second wave of Covid-19 and depressed economic conditions that prevailed globally," he noted.
In a detailed statement on the state of economy, the minister observed that the current account imbalances inherited from previous government stood firmly addressed while the economic performance was remarkable in the context of sharp growth contraction worldwide.
He said the government was confident that the Gross Domestic Product (GDP) would even surpass the growth target by June 2021, setting the stage for much higher growth the following year.
Economy is expected to maintain this strong momentum and gather more steam going forward, he maintained and attributed the economic turnaround to performance of different economic sectors.
He said the current account balance for the first four months of the fiscal year 2020-21 (FY2020-21) registered a surplus of $1.2 billion as against a deficit of $1.4 billion in the corresponding period last year, adding that the strong performance of current account balance was achieved after 17 years.
The workers’ remittances during the first four months of FY2020-21 stood at $9.4 billion as against $7.5 billion of the last year and registered a strong growth of 26.5% which augurs well for the external account stability, he said.
“Such excellent growth in workers remittances has been achieved by a combination of policy measures that include anti-money laundering regulations and incentives for promotion of financial transactions through formal banking system.”
The Foreign Direct Investment (FDI) witnessed 150% YoY increase in October 2020 to $317 million as compared with $126 million recorded in the same period last year.
“The increase in FDI reflects return of confidence of international investors and growing optimism about economic future of the country,” the minister said.
He declared that the Largescale Manufacturing (LSM) continued to rebound, expanding by 4.8% in FY20 Q1, against a contraction of 5.5% in the same quarter last year.
“Evidence of momentum returning could be seen from growing production of cement, textile, automobile and home appliances. Growth in LSM is largely supported by PM's package for construction industry and special measures announced by the government for industrial sector to fend off additional costs caused by Covid-19.”
The Federal Board of Revenue (FBR), he added, had also achieved the target of revenues by collecting Rs1.69 trillion during the July-November period of the current fiscal year against the target of Rs1.67 trillion.
The revenue collection was higher by Rs69 billion or 4.2% as compared to Rs1.62 trillion collected in the same period of the last fiscal year.
The minister pointed out that the pace of inflation further eased to 8.3% in November 2020 while the average inflation rate in the first five months of the current fiscal year stood at 8.8%.
The official External Inflows during the first four months of FY2020-21 were recorded at $3.2 billion as against $2.5 billion during the same quarter last year. This 28% increase in external inflows would help strengthen the forex reserves, he said.
The foreign exchange reserves held with the State Bank of Pakistan (SBP) increased to $13.11 billion as against $8.24 billion in the corresponding period of last year, showing a growth of 59%.
Improved forex reserves would further stabilise the exchange rate and build a buffer against any external shocks, he added.
The Pakistani rupee had shown strong performance as it appreciated about 4.9% in the last five months and was declared the third best performing currency in Asia.
Bakhtiar maintained that the country's external account stability was supported by major improvements in key economic indicators and confidence of international financial markets.
Looking ahead, the government's planned external inflows were more than sufficient to cover upcoming payments, he added.
“The recent announcement by G-20 for a second round of debt relief coupled with favourable capital market conditions for the launch of a sovereign transaction and enhanced inflows on account of improvements in trade, remittances and FDI would further give strength to the external account position of the country.”
During a recent meeting of the board of directors, the Asian Development Bank (ADB) management had also acknowledged that the government's ongoing efforts to ensure stability had started showing encouraging results despite the pandemic.
The minister maintained that the bank had disbursed $300 million on December 4, 2020 for budgetary support under Trade and Competitiveness Programme, which reflected the international financial institutions’ confidence in the government's reform agenda for sustainable growth.
He further stated that despite the challenges posed by the second wave of Covid-19, the country’s macroeconomic indicators were showing resilience and strong performance viz-a-viz the regional economies.
“This remarkable economic resilience and rebound was reflective of the hard work of Pakistan Tehreek-e-Insaf government and economic management under Prime Minister Imran Khan's leadership.”
He expressed the hope that things on the economic horizon would largely remain in favour of the country in the coming months. (With input from APP)
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