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Ministry of Finance expects Pakistan economy to rebound strongly in FY2021

The Ministry of Finance has said that Pakistan’s economic activity is expected to rebound strongly within the first quarter of FY 2021.

The ministry’s monthly “Economic Update and Outlook for August 2020” said that the government has handled the pandemic with considerable dexterity which has been acknowledged worldwide.

The country has invested in programs like BISP and Ehsaas Kafalat which are amongst South Asia’s largest social safety net systems. In addition, the government took swift and timely actions on the economic front to provide support to the business and economy during the difficult times.

Thus, with the start of the new fiscal year, signs of economic recovery have started to unfold as evident from data on macro- variables.

The economic recession, following the impact of the COVID-19 pandemic is coming to the end. Based on high frequency indicators, summarized in the MEI, economic growth has resumed in June and July 2020.

Looking forward, based on current economic, fiscal, monetary and exchange rate policies and on prospects for the international environment, economic activity is expected to rebound strongly within the first quarter of FY 2021. This implies that, given current information, economic activity in Q1 of FY2021 would recover at least around the level observed in Q1 of FY2020.

Likewise, for the trade balance on goods and services, it is expected that it will converge to the level seen in the first three months of the previous fiscal year and would, therefore, be manageable in terms of its financing Further, on YoY basis, inflation is expected to stabilize in the first quarter of the current fiscal year based on current information and in absence of unexpected shocks or policy measures, at around current levels.

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