KARACHI: Pakistan economy shows signs of recovery and stability, The StateBank of Pakistan (SBP) in its annual report ‘The State of Pakistan’sEconomy’, has revealed.
SBP says the economy is showing signs of stabilisation, helped by IMFsupport, but that the gross domestic product (GDP) growth is likely toremain subdued. The central bank kept its projection for GDP growthunchanged at 3-4% for FY20 and largely linked the growth with the patternof development spending allocated at around Rs1.7 trillion under the headof Public Sector Development Programme (PSDP) for the current year.
“Development spending may play a pivotal role, since there has been anobserved tendency that Pakistan’s GDP growth and PSDP (public sectordevelopment program) spending move in the same direction, and similar hasbeen the case in FY19… the government has budgeted a greater outlay forPSDP during the year compared to the actual spending in FY19,” the SBPsaid. “Other triggers may include an improvement in market sentimentsvis-à-vis the IMF (International Monetary Fund) program.”
The SBP said although real GDP growth is likely to remain subdued, “theearly signs of recovery are already visible”. “Macroeconomic stabilisationwill continue to be the cornerstone of economic policies during FY20,” thecentral bank said.
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The SBP in its annual report, issued Monday, added a special chapter on“Factors Constraining Investments in Pakistan” with an objective to presenta comprehensive diagnostic of the investment landscape of Pakistan and toidentify the binding policy, legal and institutional constraints, whichundermine the country’s ability to mobilize domestic and foreigninvestments to a level commensurate with its potential.
According to the SBP, being a nation of 210 million people, Pakistan couldhave attracted significant foreign investment given the abundance of cheaplabor, lucrative investment policies and a strategic geographical position.According to SBP, only 286 companies of foreign origin are operating inPakistan, vastly outnumbered by the 2,422 firms working in Turkey and 4,593firms operating in India.
