While everybody’s been concerned about high prices, especially in a small basket of commodities considered essential, there has been a tendency not to notice the real trajectory of the economy. And as the State Bank of Pakistan (SBP) disclosed just the other day, it considers that the country will record GDP growth to the tune of three percent in the outgoing fiscal year. That is no mean achievement considering how the pandemic has squeezed the life out of all emerging market economies, especially those burdened with very large debt repayment obligations.
It is, without a doubt, a feather in the cap of the country’s economic managers that bank deposits grew 18 percent year-on-year, fueled no doubt by higher remittances, and investments are up a healthy 35 percent and advances grew four percent in the same period. Also, the local stock markets has also been one of the best performing in the region, which has brought in enviable amounts of foreign portfolio investment (FPI) into the country at a time when the trend was quite the opposite because of all the uncertainties and the global recession brought about by the pandemic. The rupee is now the best performing currency in the world against the US dollar, car production numbers are high, cement and steel sales are on the rise because of the construction package, and the textile sector is awash with international orders. This means job opportunities are also increasing and the labour force has reason to be happy. It seems that the economy is settling into a nice cycle with remittances adding to the momentum of the different stimulus packages announced by the government, like the tax amnesty and the construction sector scheme, and the proceeds are being routed through banks in the form of private sector offtake, which is expected to breathe much more life into production, employment and therefore GDP growth in the next few fiscal years.
All that needs to be done now is to control prices as well. Granted, the month of Ramazan is when governments tend to struggle because of the annual pressure on prices regardless of policies, but since inflation is already pretty high this time around perhaps the government will be more proactive than usual. The government clearly deserves credit, which it doesn’t always get, for steering the economy effectively in very difficult times. And now that the numbers are beginning to tell the story about the side of the economy that is not usually highlighted in the press, people too will be able to see for themselves just where they stand. All care must now be taken to ensure that this trajectory is not derailed.