According to the Asian Development Bank (ADB) present report-2021 Pakistan’s economic growth rebounded to 3.9 percent in FY2020-2021 and is predicted to reach 4.0 percent in FY2021-22, as business activity steadily resumed in the second year of the Covid-19 pandemic.
Experts identified that Pakistan’s economy is predicted to continue recovering in FY2022, supported through stronger private investment, enhancing business activity, a steady vaccine rollout, and economic stimulus measures for FY2022.
Pakistan’s economy is on the path to recovery, supported through promising growth in the industry and services sectors. The continued rollout of the Covid-19 vaccination programme, structural reforms, and the expansion of social protection programmes are all major to ensuring inclusive and sustainable growth.
Furthermore, fiscal incentives and strategies to raise export competitiveness, bolster the presentation of the manufacturing sector, and augment private investment will continue to play an instrumental role in strengthening the economic outlook.
Experts also identified that Pakistan’s economic growth in FY2021 was supported through enhanced Covid-19 containment policies by the second and third waves of infections and continued accommodative monetary as well as fiscal strategies that accelerated the recovery across all sectors. According to the Pakistan Bureau of Statistics (PBS), the Large Scale Manufacturing (LSM) in Pakistan increased by 2.25 percent in July, reflecting a slowdown in industrial output.
The slowdown in the first month of the present financial year is in stark contrast compared to the previous few months when the industrial growth was in double digits with a claim of revival of industrial production after a slump due to a nationwide lockdown because of the pandemic. In the outgoing financial year, the LSM explained highest growth of 14.85 percent and the government of Pakistan claimed that a slum in industrial production has come to an end. On a month-on-month (MoM) basis, the big industry production contracted by 4.91 percent. Since July 2020, the Large Scale Manufacturing has rebounded after suffering months of a downturn on account of the pandemic, mostly in the automobile, textile, food, construction, chemicals, non-metallic mineral products and pharmaceutical sectors.
Experts also said that the production has witnessed raise in textile, pharmaceuticals, chemicals, automobiles, iron & steel products and fertilisers, while it declined in non-metallic mineral products, and paper & board. Statistics show that the LSM at 9.73 percent of Gross Domestic Product (GDP) dominates the overall manufacturing sector, accounting for 76.1 percent of the sectoral share. It is followed by Small Scale Manufacturing which accounts for 2.12 percent of total GDP and 16.6 percent sectoral share. According to the Pakistan Economic Survey 2020-21, despite the issues raised in the pandemic, the manufacturing sector remained sound and resilient during FY2021 on the back of well in time government of Pakistan initiatives.
Moreover, the government’s thoughtful decision to resume business activities and adoption of smart lockdowns increased sentiments and the economy gained traction after witnessing a hefty fall in FY2020. As per the PBS statistics, the entire automobile sector excluding buses showed strong growth in July 2021 compared to the corresponding period from a year ago. Production of tractors grew by 38.35 percent, trucks by 10.20 percent, jeep and cars by 92.19 percent, LCVs by 66.16 percent and motorcycles by 8.22 percent in July 2021. However, the production of buses fell by 79.59 percent. Cement output also dipped by 10.02 percent in July 2021 despite the fact that there is a greater demand following the start of construction activities and raise in exports. In the steel sector, billets and ingots also posted a growth of 9.01 percent.
Statistics also show that the production of paints and varnishes fell by 2.14 percent and cigarettes by 13.71 percent. In pharmaceuticals, the output of tablets dipped by 24.07 percent, injection by 36.53 percent, and capsules by 18.39 percent. However, the output of syrups is up by 86.67 percent. Furthermore, cooking oil production rebounded and recorded a growth of 5.20 percent and tea blended by 32.32 percent. However, vegetable ghee production declined by 10.69 percent while wheat and grain milling output dipped by 1.26 percent. The PBS for April showed that output of petroleum products declined by 3.57 percent across the board. The output of two oil products — petrol and high-speed diesel — was up by 1.16 percent and 5.29 percent, respectively, whereas furnace oil production declined by 15.52 percent, kerosene oil 2.09 percent.
Statistics show that the production of the Liquified Petroleum Gas (LPG) was up by 11.41 percent, followed through lubricating oil 131.39 percent, jute batching oil 7.74 percent and solvent naphtha by 12.87 percent, respectively. It is also important to note here, South Asia’s recovery continues as worldwide demand rebounded and targeted containment measures assisted minimize the economic impacts of the recent waves of Covid-19. But the recovery remains fragile and uneven, and most states are far from pre-pandemic trend levels.
The latest South Asia Economic Focus titled Shifting Gears: Digitization and Services-Led Development projects the region to grow by 7.1 percent in 2021 and 2022. While the year-on-year growth remains strong in the region, albeit from a very low base in 2020, the recovery has been uneven across states and sectors. South Asia’s average yearly growth is predict to be 3.4 percent over 2020-23, which is 3 percentage points less than it was in 4.0 years preceding the pandemic.