According to a quarterly report issued by the State Bank, the economy of Pakistan has the potential to grow up to 6 percent during the current fiscal year. The projection is based on possible recovery of the agriculture sector thanks to productive spending by the government and prediction of better produce this year. The country is facing current account deficits and low revenue collections, but work on the infrastructural and energy projects under the China Pakistan Economic Corridor could revive the economy in coming years. The remittances sent by expatriate Pakistanis are dwindling, but oil prices are still low as compared to other countries in the region. The private sector is actively engaged in the import of machinery and raw material and it is hoped that the large-scale manufacturing sector will be able to maintain the pace of its steady growth during the current fiscal year. Report also expects recovery of the textile industry during the second half of the current fiscal year in the wake of Rs180 billion export package announced by the government. However, the country is still facing electricity shortfall but the new power plants and the sustained increase in liquefied natural gas imports will help increase electricity generation.
The robust construction sector will also maintain its growth rate and the service sector will achieve its growth target this year. The bank especially refers to the progress in the industrial sector, increased demand of commercial vehicles, availability of the bank credit and development of new housing schemes as positive indicators to push the growth up to 6 percent.The bank also hopes that inflation will remain low due to better performance of the agriculture sector as well as stable exchange rates in the currency market. The average Consumer Price Index inflation will remain up to 5 percent during the year and foreign exchange reserves will remain at a comfortable level.The bank expects increase in the current account deficit due to import of machinery, but foreign investment in the local industry will increase its production capacity.
The State Bank is an organ of the government machinery and there is a need to establish practical coordination and liaison among all the departments concerning finance, trade, business and investment. The government has been resisting the private sector to lower the rupee value. The low currency rate always pulls down the economy to the ground level. It is hoped that the government will be able to meet its targets in the final quarter of the current fiscal year.
