LAHORE: Pakistan’s real economy is performing well with favorable signs for GDP growth rate, inflation, consumption and private sector economic activities. This was stated by the Institute for Policy Reforms (IPR) in its six-month review of the performance of the economy, here on Monday.
The IPR report said that while tabling this fiscal year’s budget, the federal government had announced a combination of macro stabilizing and growth measures to achieve its targeted GDP growth rate of 6% in FY 2018. These measures included higher revenues and lower current expenditure, as well as increase in investment, especially through FDI from China and a large PSDP.
Continuous growth in government revenue for three years running has helped limt the fiscal deficit. During July-December 2017-18, the FBR revenue grew by a further 18%. On the other hand, investment has not kept pace with plans.
Actuals for the half year show the GDP growth rate will be close to target and above last fiscal. LSM has grown by 5.55%, 0.8% off target. With a favourable monetary policy, demand has fueled production of consumer durables. Estimates for growth of major crops are favourable and half-year power supply grew by 11.8% over last year.
At the same time the report also expressed concerns on various policies of the government regarding economic sector.
It said that private sector bank credit declined during July-December 2017-18, compared to the same period last year. Just 10% of bank credit went to fixed investment. Government has also reduced PSDP envelope as well as the pace of release of funds.
The report said that sustained economic growth needs higher savings and investment, including public investment. Inevitably, this will need higher imports, and more external capital. Breaking out of this circular logic that constrains the economy is government’s challenge. It can be solved only by committing to well thought out policy over the long-term, the report added.