KARACHI: The country’s economy rebounded during the fiscal year 2021-21 with real GDP growth rising to 3.9%, reported the State Bank of Pakistan (SBP).
In its annual report titled ‘State of Pakistan’s Economy’ — which reviewed FY21 — the central bank stated that the expansion in economic activity was accompanied by a 10-year low current account balance that contributed to a significant build-up in foreign exchange reserves.
“The fiscal deficit also edged down despite COVID-related spending, leading to an improvement in the public debt-to-GDP ratio, unlike the experience of most countries across the world,” a statement issued by the SBP read.
Inflation eased
Per the report, headline inflation — based on the consumer price index (CPI) — also eased during the year mainly due to “relatively stable prices of non-food and non-energy items.” However, overall price levels, especially of food items, remained high owing to supply-side challenges.
Furthermore, average headline CPI inflation fell to 8.9% in FY21 — within the SBP’s forecast range of 7-9%.
“The resurgence in domestic demand did not translate into inflationary pressures amidst the presence of some spare capacity in the economy,” it stated.
It is pertinent to mention here that the inflation remained volatile during the year, because of the impact of the increase in fuel prices and power tariffs.
The report notes that the economic turnaround was facilitated by management of the COVID health pandemic, as well as a prompt and targeted monetary and fiscal response to counter its impact on economic growth and livelihoods.
