ISLAMABAD: Due to the government’s focus on certain targeted sectors suchas housing, agriculture, industry, construction and exports, highereconomic growth was recorded along with stabilisation during the currentfiscal year (2020-21), according to monthly Economic Update and Outlook forMay 2021.
“It is expected that in coming years the economy will have sustainable andinclusive growth for everyone through government initiatives for utilisingbottom-up approach,” it added. The rebound in economic activity was a signof recovery from sharp output contractions and was on display around theworld. For Pakistan’s economy, growth of 3.94 percent FY2021 would bringsustainably in both the short as well as long-run, thus bringing betterprospects of economic growth outlook.
The sectors that contributed in growth included agriculture sector, whichgrew by 2.8 percent during Fiscal Year 2021 as crops have witnessed agrowth of 2.5 percent because of significant growth of 4.7percent inimportant crops. Wheat production grew to 27.3 million tonnes, maize, 8.5million tonnes, rice 8.4 million tonnes and sugarcane 81.0 million tonnes,showing growth of 8.1 percent, 7.4 percent, 13.6 percent and 22.0 percentrespectively. However, cotton production dropped by 22.8 percent (7.1million bales) as compared to last year. Other crops recorded growth of 1.4percent mainly because of an increase in production of oil seeds and greenfodder while the Livestock sector has shown a growth of 3.1percent. Theoutlook of agriculture sector is encouraging on the basis of an uptick ininputs utilization.
According to the report, the Large Scale Manufacturing (LSM) production hasbounced back in March FY2021, witnessing 22.4 percent growth on aYear-on-Year basis compared to negative 21.7 percent in March FY 2020.During July-March FY 2021, LSM grew by 8.9 percent compared to negativegrowth of 5.1 percent last year. The Consumer Price Index (CPI)-basedinflation increased by 11.1 percent on a YoY basis in April 2021 ascompared to an increase of 8.5 percent in April 2020, mainly due to anincrease in prices of food items and clothing and footwear. On average itwas recorded at 8.6 percent in the first ten months of the current fiscalyear as against 11.2 percent during July-April FY 2020.
The fiscal deficit during July-March, FY2021 was contained at 3.5percent ofGDP against 4.1 percent of GDP (revised) in the comparable period ofFY2020. Similarly, the primary balance posted a surplus of Rs451.8 billion(0.9 percent of GDP) during July-March, FY2021 against the surplus ofRs193.5 billion (0.5 percent of GDP) in the same period of FY2020.
Total revenues grew by 6.5 percent to Rs4,992.6 billion in July-March,FY2021 against Rs4,689.9 billion in the comparable period of last year.Within revenues, tax collection increased by 11.9 percent to Rs 3,765.0billion during July-March, FY2021 against Rs 3,365.5 billion in the sameperiod of FY2020. Total expenditures grew by 4.2 percent duringJuly-March,FY2021 to Rs 6,644.6 billion against Rs 6,376.1 billion in thecomparable period of last year. The provisional net revenue collection byFBR grew by 14.4 percent to Rs 3780 billion during July-April, FY2021compared to Rs 3,303billion last year, surpassing the target of Rs 3,637billion.
During 01st July to April 30 FY2021 Money Supply (M2) increased by Rs1,664.8 billion (growth of 8.0 percent) as compared to an expansion of Rs1,698.1 billion (growth of 9.5 percent) last year. On Assets side, NetForeign Assets (NFA) of the banking system observed expansion of Rs 950.2billion (Rs 931.1 billion last year), on account of improved externalsector position.
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Whereas, Net Domestic Assets (NDA) increased by Rs 714.6 billion (Rs 767.0billion last year). Within NDA, Private sector credit observed significantexpansion of Rs 454.5 billion as compared to Rs 318.5 billion last year. Onaccount of 29.0 percent growth in workers’ remittances and 6.5 percentgrowth in exports, the current account posted a surplus of $ 773 million(0.3 percent of GDP) for July-April FY2021. It is worth mentioning thatexports were recorded $ 2.3 billion in April 2021 ($ 1.4 billion last year)thus posting a growth of 61.3 percent YoY basis.
As per PBS, during July–April, FY 2021, exports increased by 13.6 percentto $ 20.9 billion ($ 18.4 billion last year). The total imports inJuly-April FY2021 increased to $ 44.7 billion ($ 38.0 billion last year),thus posted 17.8 percent growth. The Foreign Direct Investment (FDI) inJuly-April FY2021 was recorded at $ 1,553.4 million compared to $ 2,301.3million last year while total foreign portfolio investment registered aninflow of $ 2182.9 million during July-April FY2021. The remittances roseto $ 24.2 billion against $ 18.8 billion last year, with a growth of 29.0percent. Remittances were recorded $2.8 billion in April 2021, against $1.8 billion in Apr 2020, showing an increase of 55.6 percent on a YoYbasis. Workers’ remittances remained above $ 2.0 billion for elevenconsecutive months.
Pakistan’s total liquid foreign exchange reserves increased to $22.9billion on May 07, 2021. After July 5, 2017, the State Bank of Pakistan’sreserves now stood at $15.8 billion while commercial banks’ reservesremained $ 7.1 billion.
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