Pakistan’s Sustained Growth Stood at 5.6 pc in FY21— IMF
Amid collapsing political conditions, Pakistan’s economy is limping back to life with a strong recovery growth of 5.6 percent in FY21. During the Covid-19 pandemic, Imran Khan’s Government claimed to mitigate unemployment and current account deficit with better planning in foreign policy.
Smart lockdown, Green Pakistan, Fundraising and Islamophobia were the highlighted subjects of the PTI government. However, increased commodity prices raised various questions about the performance. The entire nation was overwhelmed with high prices due to Pakistan economy crisis. Despite this, there was a growth in the country’s construction sector. According to the State Bank of Pakistan, with other major sectors of pakistan economy, there was unprecedented growth in the construction sector of 60pc in FY21 and 85 pc till February 2022.
“PTI Government faced Criticism for being Unable to Perform and Deliver”- But,
According to the International Monetary Fund (IMF) Annual Report on Pakistan, released 25th April 2022, economic activities in the country continued the momentum during FY21. Despite long-standing structural failures, including reduced exports, investments and productivity risks for sustainable growth, Pakistan’s economic highlights show the improvements.
“Pakistan’s economic upturn after the Covid-19 crisis point towards the country with enormous potential to tone down economic situations and challenges,” said Najy Benhassine, Country Director of World Bank for Pakistan.
Economic recovery needs to address long-standing structural flaws and boost the private sector, exports, investments and productivity.
On the back of lifted base impacts and latest monetary tightening, Pakistan’s real GDP growth was expected to grow at a moderate level of 4.3 in FY22. Surprisingly, the report appreciates the steps; Imran Khan Government took for economic growth. Current real GDP growth is 5.6%.
According to the International Monetary Fund (IMF) Report 2021, Pakistan’s current account deficit was 6% in 2019. It stood at 5.3% during the FY21 for Pakistan economy growth. Similarly, the unemployment rate stands at 7% compared to 7.4% in the previous year. It is expected to go down up to 6% during 2022.
Around this time, the regime change game was being played. However, current Prime Minister Shahbaz Sharif claims to restore the anxious and frugal state of the people. But, there is a question mark on the team’s credibility due to past performance. Compared with three and a half years of Imran Khan, despite the coronavirus strike, economic output is appreciable with GDP growth during FY21.
Soon after the No-confidence win, the Shehbaz Sharif government claimed sustainability in the rupee due to the inability of Imran Khan’s government to perform. When Imran Khan left, the Rupee in the country plunged to an all-time reduced value against the dollar. So, 1 US dollar is equivalent to RS.186.20. The Rupee stabilized with the arrival of Shahbaz Sharif and then destabilized after a couple of days. Today, Rupee stands at Rs.186.6 in exchange for 1 US dollar.
Thus, still, the government is unable to stabilize the Rupee. The situation reflects the pent-up balance in US Dollar Value. Some challenges lie with the current Prime Minister to ensure long-standing structural success.
Structural reforms are of utmost importance to rapidly implement macroeconomic stability and fiscal sustainability so that world inflationary pressures dissipate. Nevertheless, the macroeconomic risks are high. These include a potential increase in global energy prices, global financing events, and the possible risk of stringent coronavirus return to restricting mobility.
Political uncertainty slippages can lead to protracted imbalances in the country’s macroeconomic conditions. But, to mitigate the risks, the government should work on the fiscal deficit to ensure debt sustainability, closely monitor fiscal and monetary policy, and ensure exchange rate flexibility. Hence, both short- and long-term policy reforms are essential to lay the foundation for inclusive growth in the country.
