The State Bank of Pakistan released its First Quarterly report on the current state of Pakistan’s economy for the fiscal year 2020-21 today. It covers the period of July to September 2020.
The report finds that the economy has returned to pre-COVID conditions in the first quarter of the Fiscal year 2021. The report states that the timely economic policy response to COVID-19 helped in preventing deeper fallout and smooth ways for economic recovery.
Within the industry, the report notices massive industrial growth at 5%. Other indicators such as car sales, consumer financing, and fast-moving consumer goods showed a corresponding upward growth.
In agriculture, all major corps other than cotton exceeded the target during the Kharif season. It’s due to an increase in the cultivated area along with the government’s agriculture package, which focused on fertilizer subsidy. Moreover, the services sector is also making good progress along with the International and financial situation, which has improved, significantly.
On the Fiscal side, the report states that the current account and primary balance remained in surplus in the first quarter of the current financial year. The primary surplus was almost the same as in Q1-FY20 at 0.6% of GDP.
The high Inflation front in the first quarter was predominantly attributed to food inflation by supply-side factors.
In the external sector, the exports were down 10% in the first-quarter and Imports fell 3.8% in the first quarter of the financial year. Foreign direct investment grew by 0.4%. Workers’ remittances increased by 7%.
The Monetary Policy Committee retained the policy rate at 7.0 percent during the quarter. The rupee has been appreciated by 1.4% in the first quarter. Moreover, FBR has collected 4.8% more tax this year and the quarterly reports also include research on reforming the federal pension program.
This year, GDP growth is expected to be between 1.5% and 2.5%. Also, a better winter crop is expected due to the increase in the subsidized prices of wheat and subsidies.
The current account deficit is expected to be between 0.5% and 1.5% of GDP. Foreign Remittances this year are expected to be between 24 billion and 25 billion.