Amid global crisis, Pakistan economy shows resilience

[Aneeq Rashid]

Amid global crisis, Pakistan economy shows resilience

Remittances have piled up to record level to $29.4 b, from $23.1b a year earlier

gulfnews.com

Amid global crisis, Pakistan economy shows resilience
Remittances have piled up to record level to $29.4 b, from $23.1b a year earlier

Experts believe that the economy of Pakistan is resilient despite the economic shocks caused due to COVID-19 and the recent multi-decade high-price commodity shock.
Image Credit: Reuters

Islamabad: Despite several challenges on the internal and external fronts, the Pakistan government has successfully managed to bring sustainability to macroeconomics as it was indicated by the unprecedented resilience of economy during the last couple of years.
Experts believe that the economy of Pakistan is resilient despite the economic shocks caused due to COVID-19 and the recent multi-decade high-price commodity shock.

“At a time when the economy of the whole world witnessed negative growth, the Pakistan economy performed well owing to prudent policies introduced by the government,” President Islamabad Chamber of Commerce and Industry (ICCI), Shakeel Munir told APP.
Finance Ministry in a recently published report said that Pakistan boom-bust life cycle appeared cyclical than sustainable in past as has been reflected from past global commodity, political or economic shocks of 1998, 2009, & 2018, where economy got busted in very short interval of time. However, the incumbent government put the economy on right path to ensure sustainable growth.
The ICCI President attributed the good economic performance to the excellent management by the government during the pandemic period, which is leading the economy to grow at around 5 percent of GDP during the current fiscal year. Last year, the economy performed above expectations as the GDP growth was witnessed at four percent, tax collection exceeded targets, reserves improved, current account reported lowest since 2011.

This growth was achieved when rest of the world was encountering massive output contractions. The growth in India during that period contracted by eight percent, in United Kingdom by 10 percent, United States of America by 3.7 percent and in Iran 6.5 percent.
The ICCI President said, “The initiatives taken by the State Bank of Pakistan for business community helped in generating economic activity and thereby led to export growth. All other sectors of economy also showed good performance as revenues and remittances witnessed considerable growth whereas the construction sector also boomed along with forty allied industries.”

Remittances and export earnings
Remittances have piled up to record level to $29.4 billion, from $23.1 billion year earlier whereas the federal taxes registered a record growth in FY21 and came almost Rs one trillion more than 2018 level at Rs 4,764 billion. Similarly, the growth in non-tax revenue witnessed a massive increase to Rs1,630 billion.
Pakistan’s macroeconomic performance has also been widely accepted by all international macro-economic Financial Institutions Including International Monetary Fund (IMF), World Bank, Asia Development Bank (ADB), Moody’s, S&P and Fitch etc.

Likewise, the government’s response to the pandemic had been widely acclaimed and recognized.

According to The Economist, Pakistan has been ranked number one in the ‘Economists’ world normalcy index as the country has lifted most of its COVID-19 restrictions imposed to curb the virus spread.

“The performance of economy reflected the good management of the government,” said member of the Prime Minister’s Economic Advisory Council, Abid Qayyum Suleri, who is also Executive Director of Sustainable Development Policy Institute (SDPI).
n external sector, the finance ministry’s report added, remittances and exports were above than pre-Covid level of 2019-20 while current account deficit posted 10 years low of $1.9 billion in FY21.
Export of goods came in at $25.6 bln, up 14 per cent higher in FY21, it said adding that for the first time in the last ten
years, exports indicators are looking promising and the average monthly exports now targeting $3 billion.

Export of services also increased by 10 per cent to $5.9 bln while IT sector exports have doubled from PML-N time and expected to reach US $ 3.5 bln to US $ 4 bln, up 300 percent by the end of this government’s term.

 

[mhosein]

It goes worse before it gets better. Pakistan has endured two decades of the American circus, i.e War on Terror and in these two decades, were governments of thieves that plundered Pakistan for all it's worth. Pakistanis have the golden opportunity to work hard and purge corrupt politicians. CPEC and honest governance will turn the tide for Pakistan.

The famous quote of probably the last honest President of America rings true for Pakistanis, "Ask not what your country can do for you, rather ask what you can do for your country."

 

[Pak Nationalist]

The CAD is rising at the back of the swelling import bill, inflation is running amok, with PKR at the threshold of breaching the 180 to USD mark. Growth is not sustainable, every informed individual knows that. The growth bubble is bursting much sooner than earlier bubbles. The reason is that the underlying structural problems affiliated with chronically low tax to GDP ratio, the productive capacity of the national economy, and now nonexistent domestic food production surpluses remained as is while growth was pumped by the PTI government to turn the tide of public opinion in its favor. Then the chorus of the finance ministry, SBP, and PR managers of the incumbent govt. began chanting hymns of sustainable growth (we have heard these from the Musharraf era whenever a growth bubble is formed by pumping growth "inorganically").

Things might have been different if the current regime paid as much attention and spent as much energy as it did on bringing the KoRrUpT to the dock to construct, operationalize and manage SEZs per best global practices (through independent SEZ management authorities). Neither the KoRrUpT were docked, nor did the productive capacity of the Pakistani economy (industrial output) see a considerable expansion. The increase in exports (relatively much smaller than the increase in imports despite the MASSIVE devaluation of PKR and provision of cheap power input) came at the back of the burgeoning cost of production in global markets and PBS's own data shows that the quantum of merchandise exported actually contracted.

If all was hunky-dory as this poorly researched article (outdated) contends it is, we would not be awaiting anxiously for IMF to begin bailing us out yet again with SBP held reserves losing 160 plus million USD each week, or we would not be taking a bilateral loan of over 3 billion USD from the Saudis to keep things under control until IMF begins bailing us out and we get access to other multilateral lending options.

Fanboys would blow each other's horns as usual under this feel-good thread that has nothing to do with this thing called "reality".