The country is on sound economic footings that are evident from the latest data of key economic indicators. Two important data points released Industrial output and SPI. Both highlighted the sound economic footings. As per Pakistan Bureau of Statistics (PBS), Large Scale Manufacturing (LSM) grew by 8.2% in February; 7.6% during July-Jan FY22. The Sensitive Price Index (SPI) was down 1.37% week-on-week to 15% from 21% in December 2021.
Owing to robust growth of the country’s large scale manufacturing, agriculture and exports, the Gross Domestic Product (GDP) growth is likely to exceed 5% mark against the set target of 4.8% for the fiscal year 2021-22. The welcome news is that the LSM has grown by 8.2% in January against same month of last year and 4.2% against December 2021. The LSM growth slowed down in August, September 2021 however the good news was that it had come again on high growth. The economic growth momentum has picked up again as our all agriculture crops are growing at 6 to 12 percent, and exports and services sectors are also growing at high pace.
No doubt there were some headwinds such as inflation but the growth was sustainable and robust. To curtail inflation and pass on minimum impact of international inflation pressure to the masses, the government had taken several measures including significant relief in prices of petroleum products and electricity. Due to such measures, the Sensitive Price Index (SPI) based weekly inflation had reduced by 1.15 percent in a single week. With respect to the a recent world happiness index issued by a United Nation’s body, Pakistan’s happiness index had improved by 7 points in one year however that of India had declined by three points.
The elements on which the index was based included perception of corruption, social support, freedom to make choices, GDP per capita, life expectancy, and generosity. In Asia, Pakistan is among the top 15 happiest countries. The current account posted high deficit for few months but now due to the government’s measures to curtail imports and increase exports, the deficit shrank significantly from over $2 billion in January to mere $545 million in February. Our reserves with the central bank are almost $16.6 billion, so there has not been any hustle and bustle in the reserves as in the past when the reserves started depleting fast after high current account deficit.
The ongoing talks with the International Monetary Fund (IMF) to release the next tranche of the programme, the IMF has expressed reservations over the Pakistan government’s recent relief in petroleum products and electricity. The IMF had asked us to show the agreements and proofs that how the subsidized money would be managed. The IMF should have no reason to stop the next tranche.
The government is inclined to issue the Euro bond as soon as the international markets settle down and the rates become normal. Pakistan’s foreign exchange reserves at the lowest level and they had reserves enough to pay for imports of only one month. Wheat production will grow by 5 to 6 percent this year and the government might not have to import it during next year. However, in order to increase the strategic reserves, the government might import 500,000 tons of wheat.
