In its first quarterly report on the state of the economy, the State Bank of Pakistan has expressed the hope that the economy will achieve growth rate of six percent during the current fiscal year. The prospects of growth are strong as the country is converting into a big consumer market which is spurring retail sales and commercial activities. However, there is a need to work on external sector by consolidating the gains of export growth and attract foreign direct investment to keep the overall balance-of-payment deficit within limits. The exports had been declining for the last four and half years which widened the current account deficit as the imports gained the volume twice of the exports. But the emergence of the country as a strong consumer market has created interest in entrepreneurs of various developed economies to get their share of slice in the economy of Pakistan. Unfortunately, whenever economic activities begin to take a step forward, some unusual even throws it back, undermining the growth cycles. The State Bank takes increase in revenues collections as an outcome of the expanding tax base the first quarter of the current fiscal year.
As the foreign donor agencies are already calling for introduction of structural reforms in the fiscal and the external sectors for the achievement of macroeconomic stability, the report also stressed the need for preparation and implementation of reforms. However, the political leadership and the government policymakers are not yet ready for any paradigm shift in the policy matters. The report claims the recent deprecation in Pakistani rupee has increased demand for Pakistani products in the international markets, but fails to mention increase in the cost of product due to increase in the value of the imported raw material. According to the report, average inflation will remain below its annual target of 6 percent during 2017-18, but devaluation of rupee will increase the cost of imported goods and uncertainty in the oil prices can pose risks to the production sector. However, the bank kept the police rate by 425 basis points since the autumn of 2014 due to low inflation. Analyzing the bank report, it is difficult to predict which way the economy will move in the near future when the country is already passing through political uncertainty and foreign powers are pressuring Pakistan to get involved in a war which has nothing to do with the nation.
