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Economic indicators stay positive, external sector shows impressive growth

Economic indicators stay positive, external sector shows impressive growth

ISLAMABAD: Despite several challenges, the prudent policies adopted by the incumbent government helped achieve the macroeconomic stability and now the economy was witnessing positive growth as suggested by economic indicators.  “The external sector which was under strain in last two years due to falling exports and declining remittances has now started showing positive and impressive growth both in exports and remittances,” official sources said.

In August 2017 exports have witnessed a growth of 12.89 percent over the same period of 2016, while over previous month the exports are higher by 14.41 percent and imports are only 2.42 percent and during July-August, FY2018 exports have registered a growth of 11.80 percent, as reported by Pakistan Bureau of Statistics (PBS).  Similarly, the workers’ remittances have shown a growth of 13.18% during July-August, FY2018 and on month on month basis higher by 26.8 percent in August 2017.  “These all bode well that pressure on current account will ease, going forward,” they added.

The growth in Foreign Direct Investment (FDI) was also on upward trajectory as during July 2017, FDI posted a stellar growth of 162.8 percent.  The Large Scale Manufacturing Industries (LSMI) in the country witnessed an impressive 5.6 percent growth during the fiscal year 2016-17 as compared to output of last year.

While on year-to-year basis, the industrial growth increased by 3.3 percent during June 2017 as compared to same month of last year.

The annual Consumer Prices Index based inflation rate also remained in single digit at 3.4% in August, according to PBS data.

Substantial progress has been made to bring potential taxpayers in the tax net during the last four years as the number of income tax return filers which was around 0.76 million for the tax year 2012 has risen to 1.26 million in the tax year 2016 and would further increase in coming years.

The share of direct taxes in total taxes has increased from 20% of total taxes in 1990-91 to 31.1 percent in 2004-05, 38.2 percent in 2012-13 and 39.1 percent in 2015-16.  In FY 2016-17 the share of direct taxes reached 40% and it has become the single largest tax collected by FBR, the sources said adding that the government was focused on further increasing the share of direct taxes through various policy and administrative reforms including broadening of tax base.

The revenue collection has also witnessed a substantial increase during last four years. The net collection increased from Rs1,946 billion in 2012-13 to Rs3,362 billion in FY 2016-17, registering an overall growth of around 73%.

In absolute terms revenue collection has been increased by Rs.1.4 trillion while the tax-GDP ratio of the country has reached 12.5 percent in FY 2016-17.  The external debt sustainability has increased manifold during the tenure of present government as recent debt sustainability analysis showed that external debt would remain on a downward trend over the medium term and staying well below the risk assessment benchmarks.

The increased sustainability of external public debt is also evident from the fact that the ‘Share of external loans maturing within one year’ has been reduced from 68.5 percent of official reserves at the end of June 2013 to 31.9 percent at the end of December 2016 showing improvement in foreign exchange stability and repayment capacity, the sources added.

The sources said that the fact that Pakistan’s economic indicators were positive has been acknowledged internationally and recently, Asia Development Bank (ADB) has stated that Pakistan was enjoying growth despite trade contraction.  Keeping in view the grown economic indicators, there would be no need for any international program including International Monetary Fund (IMF) for any bailout considering the debt dynamics have shown sustainability, they added.