Pakistan needs to attain 7% economic growth: Tarin

ISLAMABAD: Pakistan needs to achieve economic growth of up to 7 per cent and for realising this goal, there was a dire need for economic stability, a senior government official said.

Addressing virtually on “Pakistan’s Economy – Fragility and Smart Action Strategy” National Workshop Balochistan-7, Federal Finance and Revenue Minister Shaukat Tarin said that the government was committed to ensure that the growth momentum remains intact.

The government’s development plan was to enable the country stand on its feet. “It would put the economy on a higher growth trajectory; with growth being generated not by stoking consumption through borrowing, but through higher investment, efficiency and enhanced productivity,” he added.

The government is focusing on measures to establish and strengthen an economy, which was not only self-reliant but also capable of competing with its competitors globally, he said.

Although the incumbent government inherited an economy in crisis with significantly higher macroeconomic imbalances; however, with prudent policies the country has been moved from stabilisation to higher growth.

After considerable efforts, the government has succeeded in stabilising the economy and putting it on the optimal growth path, Tarin said, adding that the Covid-19 brought multifaceted challenges for Pakistan.

Before the coronavirus pandemic, the global economy was projected to grow 3.4 per cent in 2020 but due to the Covid-19, global growth contracted 3.3 per cent. The world’s top most economies witnessed negative growth as the United States witnessed negative 3.5 per cent, Euro Area -6.6 per cent, the UK -9.9 per cent, Japan -4.8 per cent, while many others suffered badly.

The economic growth contracted 0.47 per cent in FY2020, the finance minister said, adding that Pakistan contained adverse effects of the pandemic on the economy and vulnerable segments of the society through appropriate measures.

The government announced the largest-ever fiscal stimulus package of Rs1.24 trillion. This package was also complemented by the liquidity support for the industry, especially the Small and Medium Enterprises (SMEs) from the State Bank of Pakistan.

In addition, a construction package for the low-cost housing and jobs creation was also announced due to its high employment capacity. As a result, Pakistan has largely escaped the devastation and bounce back, compared with its peers in the region.

The minister said the economy rebounded strongly in FY2021 and posted a growth of 3.94 per cent on the basis of 2.77 per cent, 3.57 per cent and 4.43 per cent growth in agriculture, industrial and services sectors, respectively.

In addition, the inflation rate was contained at 8.8 per cent during July-May FY2021 against 10.9 per cent last year due to vigilant monitoring by the National Price Monitoring Committee (NPMC) and district administration, while tax collections has shown remarkable growth of 18 per cent, which has crossed the psychological barrier of Rs4 trillion, which is not based on holding back of refunds.

The comfortable external balance position of Pakistan has been supported by surplus current account balance on the back of robust flow of remittances and a sustained recovery in exports.

Current account deficit of $4.3 billion (-1.8 per cent of GDP) in July-May FY2020 turned into a surplus of $0.2 billion (0.1 per cent of GDP) during July-May FY2021.

Likewise, exports increased 10.3 per cent to $23.1 billion in July-May FY2021 against $21 billion in the same period of the last year, Tarin said, adding that Pakistan has been placed among the top 10 recipient countries that received the most remittances in 2020 and its share as a percentage of GDP increased to 9.9 per cent. During July-May FY2021, the remittances soared to $26.7 billion, posting a growth of 29.4 per cent, he added.

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