ISLAMABAD- Pakistan’s economy is set to surpass last year’s decade-highgrowth of 5.3 per cent in the current fiscal year 2017-18 but would remainshort of the target set by the government, the country’s central bank saidon Saturday.
The economy will remain at risk of a widening current account deficit,which is a combination of exorbitant oil imports, significantly maturingexternal debt repayments and slightly lower worker remittances in theremaining three months of FY18, The State Bank of Pakistan (SBP) said.
The SBP while announcing the reports on the second quarter economic growthalso cautioned that the growth would remain short of the 6 per cent targetdue likely to lower wheat output and late sugarcane crushing, The ExpressTribune reported.
“Pakistan’s economy surpassing last year’s growth rate (5.3 per cent)appears strong GDP growth is likely to remain slightly below the target of6 per cent (in fiscal year 2018),” the SBP said in the second quarterlyreport for FY18 on the state of Pakistan’s economy.
The deficit will continue to impact the foreign exchange reserves and keepeconomic managers engaged in making short-term international borrowing.”The risks to overall macroeconomic stability have increased due towidening imbalances in the country’s balance of payments,” the report said.
“Reserves have already fallen to less than three months of the country’simport bill,” it said. The central bank predicted that inflation wouldremain in the range of 4.5-5.5 per cent against the target of 6 per centmainly due to low food prices. It stood at 4.2 per cent last year.
Pakistan may attract maximum remittances of USD 20.5 billion from overseasworkers in FY18 that would be slightly lower than the target of USD 20.7billion. Imports may shoot up to USD 54.3 billion against the target of USD48.8 billion mainly due to heavy oil imports and imports of textile andsteel inputs.
At the same time, exports may also surpass the target of USD 23.1 billionto a maximum of USD 24.6 billion. However, the growth would remaininsufficient to finance the gap in current account deficit. The credit flowto private sector recovered strongly from mid-January 2018 and increased byRs 167.9 billion between January 12 and March 16 compared to creditexpansion of Rs 60.3 billion in the corresponding period of previous year.