ISLAMABAD: Economic growth for fiscal year 2022-23 is likely to remain below budgeted target due to devastation created by floods, finance ministry said in recent report released here.

“This combination of low growth, high inflation and low levels of official reserves is particularly challenging for policy makers,” says Monthly Economic Update and Outlook for December 2022.

It says, as in many other countries, Pakistan’s economic activity remained currently below potential, implying negative output gap. At same time, again as in many other countries, inflation remained substantially above targets.

Net FBR revenues increased by 9.2 percent to Rs 1,317 billion during Jul-Oct FY2023 against Rs 1,205 billion last year. Tax collection grew by 16.8 percent to reach Rs 2,139 billion in first four months of FY2023 up from Rs 1,830 billion in comparable period of last year.

In Jul-Nov FY2023, workers’ remittances recorded at $ 12.0 billion against $ 13.3 billion last year, a decrease of 9.6 percent.

During first five months of FY2023, Pakistan’s economy showed signs of resilience to domestic and global challenges. Despite facing inflationary pressures, trade and current account deficits are continuously showing improvement, which is sigh of relief for financing challenges.

Increasing long run growth trends of output, per capita real incomes and employment can only be achieved by stimulating investments in new production capacities and improving overall productivity.

According to report, inflationary pressure has started easing out as Month-on-Month (MoM) Consumer Price Index (CPI) inflation declined from massive high of 4.7 percent in October 2022 to 0.8 percent in November.

Same trend is witnessed in Sensitive Price Indicator which decelerated for three consecutive weeks in December that would also be transmitted into CPI inflation of current month.

On agriculture productivity, report says, standing water due to recent floods may create problem in achieving assigned wheat sowing target, however, federal and provincial governments are working hard and committed to enhance wheat productivity.

Large Scale Manufacturing output came in somewhat lower than expected on basis of baseline scenario.

Foreign Direct Investment reached $ 430.1 million during July-November FY2023 against $ 884.9 million last year, showing decrease of 51.4 percent.

Published in The Daily National Courier, December, 31 2022

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