Pakistan's GDP To Grow At 5.5% In FY22: Planning Ministry

ISLAMABAD, (UrduPoint / Pakistan Point News - 26th Nov, 2021 ) :Pakistan's economy is likely to surpass the annual growth target by a fair margin likely in the range of 5.0 � 5.5%.

According to the first quarterly economic review for FY2021-22 released by the Ministry of Planning, Development, and Special Initiatives on Friday, recent build-up in aggregate demand pressures is reflected through rising demand for imports and heightened credit to the private sector.

Moreover, rising consumption trends of energy and consumer durables during 1QFY22 are indicative of robust growth in economic activity.

The review added that with the easing of Covid restrictions, a cautious recalibration of the macroeconomic policy mix is required to strike a balance between supporting economic growth, ensuring debt sustainability, and advancing structural reforms that will help to improve the external current account prospects and build investors' confidence.

The momentum in imports is especially endangering the prospects of macroeconomic stability and the existing momentum in exports along with heightened remittance inflows are partially offsetting growing trade imbalances and debt servicing burden As far as the current account deficit is concerned, the external sector prospects are likely to remain within the manageable limit of below 3 percent of GDP.

Global commodity prices are expected to remain bullish for the next few months and thus its pass-through to domestic inflation will keep the inflationary situation complex.

Improved domestic supply situation of essential items is likely to offset further build-up of inflation albeit at elevated levels of 8.5% target for FY22 SBP has anchored the core inflationary expectations well until now, despite some upward pressures from supply management issues and surge in international commodity prices as well as upward adjustment of utility tariffs.

The policy rate remained supportive at large, however, a case could be advanced for upward adjustments.

On the fiscal side, improved tax revenue collection is likely to emerge as a key challenge mainly owing to foregone import duties and sales tax collected from POL products and cash margin requirements on non-essential imports.

The economic stimulus package announced by the government has helped in the revival of the manufacturing sector.

However, the pace of this recovery is still hindered by supply chain glitches at the local and global levels. The agriculture sector was relatively less affected by various Covid-related restrictions.

The output of Kharif crops is set to post another record production as suggested by initial estimates. Growth prospects in the service sector, which was the most affected by the Covid restrictions, have improved significantly.