Daily Times

ISLAMABAD: Reacting to the World Bank’s report about challenges facing Pakistan’s macroeconomic stability, the government on Sunday claimed a resilient economy was on a path to stabilisation.

“An overview of macroeconomic indicators of the country clearly speaks of Pakistan’s economic resilience despite the slowdown in the global economy,” commented a spokesman of the Finance Ministry on Sunday. “Despite challenges Pakistan’s economic fundamentals remain strong,” he added.

Referring to the World Bank report, he said, it has also pointed to challenges of ?scal and external imbalances, and stated that these could affect the country’s growth prospects, if not addressed.

“The government understands that these are mid-course corrections which are taking place in the macroeconomic framework while overall there is no reversal from the path of stabilization.”

Reiterating the government’s commitment to maintaining macroeconomic stability, he said the government was aware of the challenges. According to the spokesman, the government was eyeing at seven per cent growth trajectory in the medium term while keeping high growth inclusive and pro-poor.

“The early indicators of the economy such as strong growth of LSM sector during July- August, 2018, better crop production estimates and increasing exports, remittances and FDI all indicate towards improvements in macroeconomic conditions,” he added.

He duly recognised the World Bank assessment of the economy that was presented in its report was balanced. Projecting positive side of WB’s assessment, he said, it was appreciation of the progress made towards making economy more stable. ‘To continue with an upward growth trajectory and sustain the hard earned achievements, Pakistan will need to continue with economic reforms and pursue pro-growth policies,” he quoted from the World Bank report.

The WB’s report highlighted that FDI had increased. Inflation is likely to increase on account of increase in aggregate demand and linked to bullish economic prospects.

Likewise, the aggregate consumption will grow on account of recovery in remittances. Services sector will grow due to healthy contribution from its sub-sectors whereas industrial sector will continue to grow due to improved power supplies and CPEC. The agriculture sector will also expand. External public debt as percentage of GDP continues to decline; the official exchange rate remained stable in FY2017 and Credit to private sector picked up.

The spokesman, meanwhile, admitted that current account deficit gad widened to US$12.1 billion during FY17 as compared to US$4.9 billion in FY16. “It was mainly due to increase in imports of machinery, industrial raw material and petroleum products,” he said. These imports enhance productive capacity of the economy for higher outputs and exports in future, he said.

Due to stabilizing security environment and un-interrupted power supplies, Pakistan’s export performance has returned to growth zone, he claimed. Exports during July-September FY2018 posted a healthy growth of 12.4 percent as compared to the same period last year.

Imports have started to taper off due to corrective measures of the government. Workers’ remittances have also returned to growth zone. In July-October FY2018, workers’ remittances have shown a growth of 2.3 per cent. FDI inflow during July-October, FY 2018 has also registered a growth of 57 per cent. The recent pressure on external account is only short term and will peak out this year as various energy and infrastructure projects are completed. SP has recently reaffirmed Pakistan ‘B’ short-term and long-term ratings with stable outlook.

Published in Daily Times, November 13^th 2017.