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IMF revises up Pakistan’s real GDP growth rate to 3.9%

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IMF revises up Pakistan’s real GDP growth rate to 3.9%
Reports says projections are revised up for the MEast and CAsia due to robust activity in some countries
APP| July 28, 2021

an afp file image of imf logo

An AFP file image of IMF logo

ISLAMABAD:

The International Monetary Fund (IMF) on Tuesday revised up its projection for Pakistan's real Gross Domestic Product (GDP) growth rate to 3.9%.
In its World Economic Outlook report 2021 (update), the IMF said, "Projections are revised up for the Middle East and Central Asia due to robust activity in some countries (such as …Pakistan)”.
Read: Pakistan’s public debt to GDP remained broadly unchanged: IMF
Earlier in April this year, the IMF had projected Pakistan's real GDP to grow at 1.5% in the year 2021 despite a higher projected rate of 3.0% by the State Bank of Pakistan (SBP).
Pakistan’s government had already released the provisional data of GDP growth rate (3.9%) for the year 2020-21 backed by robust industrial growth and higher than expected agriculture output.
The SBP on Tuesday forecast the GDP growth to rise from 3.9% in FY21 to 4-5% this year, and average inflation to moderate to 7-9% from its recent higher out-turns.


Meanwhile, the IMF in its statement said economic prospects have diverged further across countries since the April 2021 World Economic Outlook (WEO) forecast.
Vaccine access has emerged as the principal fault line along which the global recovery splits into two blocs: those that can look forward to further normalization of activity later this year (almost all advanced economies) and those that will still face resurgent infections and rising Covid death tolls, it added.
The recovery, however, is not assured even in countries where infections are currently very low so long as the virus circulates elsewhere.
Read more: GDP growth expected to reach 6% by 2023: Hammad Azhar
The global economy is projected to grow 6.0 percent in 2021 and 4.9 percent in 2022.The 2021 global forecast is unchanged from the April 2021 WEO, but with offsetting revisions. Prospects for emerging market and developing economies have been marked down for 2021, especially for Emerging Asia.
By contrast, the forecast for advanced economies is revised up. These revisions reflect pandemic developments and changes in policy support. The 0.5 percentage-point upgrade for 2022 derives largely from the forecast upgrade for advanced economies, particularly the United States, reflecting the anticipated legislation of additional fiscal support in the second half of 2021 and improved health metrics more broadly across the group.


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Patriot forever

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They will revise further as Pakistan has achieved a growth of 4.4-4.6% in FY2021. Let the final numbers come in, LSM for June is still not published, and given a massive boost in both exports imports tax collection in June will easily surpass earlier estimates ( not the 3.9% but 4.4%)
 
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Crimson Blue

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So Muzzamil Aslam was tell everyone since end of last year that there is no way that Pakistan's GDP growth rate would be low as 1.5% but no one believed.

I guess with all its resources & inside information, all of IMF's analysts could not come with a growth estimate as good as Muzamil's.
 

Patriot forever

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So Muzzamil Aslam was tell everyone since end of last year that there is no way that Pakistan's GDP growth rate would be low as 1.5% but no one believed.

I guess with all its resources & inside information, all of IMF's analysts could not come with a growth estimate as good as Muzamil's.
Muzammil aslam is a market guy who analyzes data every single day and makes predictions based on hard data. He was not alone, all the brokerage firms shared the same sentiment including ismael securities.
Only the paid or biased people like hafeez pasha (i think husband of ex plmn provincial finance minister) or shahbaz rana (a scam) and that dawn piplya.

Most of the journalists lack basic knowledge infact in every field not just economics and work for the highest bidder or on an agenda, cufrently plmn is the highest paying party.

IMF normally is not that much off the mark but Pakistan managed corona exceptionally and the economy had a very strong recovery, even SBP prediction was 2.1% at the start of year.
 
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Patriot forever

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Nice, so the government forecasts are correct. Is this a post-covid bump? Has the outlook changed for 2022 and 2023?
We should treat forecasts as forecasts, even government targets. Let the hard data flow in, we will be able to see after the first quarter atleast what the trend is.
Apart from data from markets, Finance ministry also releases MEI (Monthly economic indicator) every month. The first number is provisional but is revised when the next months provisional numbers are released.

1st big news for this year is policy rate is intact atleast for this quarter and the momentum in consumer financing is +ve. First quarter is critical as we have to deal with a new corona wave.
 

Jungibaaz

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We should treat forecasts as forecasts, even government targets. Let the hard data flow in, we will be able to see after the first quarter atleast what the trend is.
Apart from data from markets, Finance ministry also releases MEI (Monthly economic indicator) every month. The first number is provisional but is revised when the next months provisional numbers are released.

1st big news for this year is policy rate is intact atleast for this quarter and the momentum in consumer financing is +ve. First quarter is critical as we have to deal with a new corona wave.
I think the target is very achievable, the OECD is forecasting an even higher global average for this year. And even lower trend rate economies will post impressive figures. So 4% is not too immodest. Global growth is now forecasted at 6%. A huge chunk of this growth even for us will come from the whopping 10% forecast increase in global trade volumes. I think the current IMF forecast looks really good for us.

But we must be very careful not to overextend fiscally, continue to make reforms, and keep level-headed policy rates. I saw the news of unchanged policy rates on my screen as well, I wonder how well that'll hold up over the next two-three quarters given trends and inflation forecasts all around the world?
 

Patriot forever

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I think the target is very achievable, the OECD is forecasting an even higher global average for this year. And even lower trend rate economies will post impressive figures. So 4% is not too immodest. Global growth is now forecasted at 6%. A huge chunk of this growth even for us will come from the whopping 10% forecast increase in global trade volumes. I think the current IMF forecast looks really good for us.

But we must be very careful not to overextend fiscally, continue to make reforms, and keep level-headed policy rates. I saw the news of unchanged policy rates on my screen as well, I wonder how well that'll hold up over the next two-three quarters given trends and inflation forecasts all around the world?
From what I see if the inflation is driven primarily by high input costs or rise in global commodity prices or supply side constraints, hiking interest rate will have little impact directly.
But the interest rate will have a a limited impact on our external position, especially in the auto sector (even if we consider locally assembled cars).
The major pressure on our current account will come from increasing RLNG, oil, coal prices.
Food sector imports are there as smuggling to Afghanistan will be alot more given the turmoil has affected their grain output. Cotton, cooking oil, tea everything is expensive because of global increase in prices.
TERF financing is an another factor.

In short i think SBP forecast of 2-3% CAD is very realistic.

SBP is planning to introduce a similar scheme as TERF for the SME as well, which will be nothing short of a breakthrough if properly executed. But like TERF (machinery financing instead of brick and mortar) it will have an impact on CAD.

IMF programme is essential for debt payments and especially to keep rupee under control. Glad we are starring with satisfactory reserves.

It will be a rollercoaster year.
 

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