LAHORE – Pakistan’s real economy is performing well with favorable signsfor GDP growth rate, inflation, consumption and private sector economicactivities. This was stated by the Institute for Policy Reforms (IPR) inits six-month review of the performance of the economy, here on Monday.
The IPR report said that while tabling this fiscal year’s budget, thefederal government had announced a combination of macro stabilizing andgrowth measures to achieve its targeted GDP growth rate of 6% in FY 2018.
These measures included higher revenues and lower current expenditure, aswell as increase in investment, especially through FDI from China and alarge PSDP.
Continuous growth in government revenue for three years running has helpedlimit the fiscal deficit. During July-December 2017-18, the FBR revenuegrew by a further 18%. On the other hand, investment has not kept pace withplans.Actuals for the half year show the GDP growth rate will be close to targetand above last fiscal.
LSM has grown by 5.55%, 0.8% off target. With a favourable monetary policy,demand has fueled production of consumer durables. Estimates for growth ofmajor crops are favourable and half-year power supply grew by 11.8% overlast year.
At the same time the report also expressed concerns on various policies ofthe government regarding economic sector.It said that private sector bank credit declined during July-December2017-18, compared to the same period last year. Just 10% of bank creditwent to fixed investment. Government has also reduced PSDP envelope as wellas the pace of release of funds.
The report said that sustained economic growth needs higher savings andinvestment, including public investment. Inevitably, this will need higherimports, and more external capital. Breaking out of this circular logicthat constrains the economy is government’s challenge. It can be solvedonly by committing to well thought out policy over the long-term, thereport added.