KARACHI – The State Bank of Pakistan has revised annual growth forecasts to3-4 percent for the current fiscal year.
In the Annual Report, the central bank projects real Gross Domestic Productgrowth below the previously announced range for the current fiscal year,citing massive floods, and the stabilisation policy as major factors.
SBP said the economy was already in a stabilisation phase before deluges,which wreaked havoc across the country. The central bank sheds light onprice stability, conduct of monetary policy, financial stability, andmeasures to support economic policies in report.
It said Pakistan remained vulnerable to adverse developments in the globaleconomy. Hence, a combination of adverse global and domestic developmentsled to the reemergence of macroeconomic imbalances during FY22.
It mentioned global commodity prices and the fallout of the Russia-Ukraineconflict effected the current account deficit, while delay in theresumption of the IMF program and political instability aggravatedPakistan’s vulnerability through the depletion of Foreign Exchange reserves.
The report said the depreciation of local currency amplified inflationarypressures by magnifying the effect of the global price surge.
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It said the net inflow of foreign exchange loans and liabilities soaredcompared to last year, but remained lower than the planned commitment.
Mentioning a surge in commodities like palm oil and tea, alongside thesupply-demand gaps in some commodities further aggravated the situationwhile fuel inflation remained at an elevated level during the year.
The report revealed that taxes achieved a six-year high growth and exceededthe upward revised budget for the year. The government and central bankundertook several corrective measures to curb the pace of domestic demandincluding raising the policy rate by a cumulative 675 bps, tightening theprudential regulations for auto and consumer financing; and imposition ofcash margin requirements on a number of import items.
