A look at six key economic indicators during the five year tenure of the Pakistan Muslim League-Nawaz government
Economic growth in Pakistan is currently at 5.28 percent—the highest in nine years. It is the fastest pace of economic growth in Pakistan since 2006-07, when gross domestic product expanded by 6.8%. The outgoing government has set it eyes on an ambitious growth target of 6% for 2017-18, although it has fallen short of its annual growth rate targets in the past four years.
The government has managed to significantly bring down inflation since its first year (2013-14), when inflation peaked at 8.62 percent. It fell to a low of 2.82% in 2015-16, but has since picked up again, rising to 4.4% in January 2018 and with experts expecting consumer inflation to move further up in the coming months.
The government significantly brought down fiscal deficit (the difference between government revenues and expenditures) since 2012-13, when it stood at 8.2%. But a recent IMF report says the key economic indicator might go as high as 6% for 2017-18, much higher than the government’s target of 4.1%. The IMF also put 2016-17 fiscal deficit at 6.3pc of GDP, higher than the government’s estimates of 5.8%—the highest in four years.
Foreign remittances, a key inflow for the Pakistani economy, have risen from the $15.8 billion recorded in 2013-14. The SBP says overseas Pakistanis sent $9.7 billion in remittances in the first half of 2017-18, up 2.5% in the previous year. However, despite growth in inflows, remittances from Saudi Arabia have been falling in recent years. Pakistan received $2.53bn from the kingdom in the last six months, a decline of 7.5% compared to a 5.5% decrease the previous year.
Foreign Exchange Reserves
Slow but consistent growth of reserves was the cornerstone of the ruling party’s economic growth policy since it took over from the PPP government. But sliding foreign exchange reserves in the past year has now emerged as the biggest problem for the economic managers. Reserves grew to an all-time high of $24.025 billion in October 2016, but have quickly shrunk since then owing to a buildup of external debt, increasing trade deficit, and insufficient rise in exports. According to SBP, the country’s foreign exchanges reserves stood at $11.77bn on March 29, almost half of the Oct 2016 figure.
The PML-N government claims to have picked its revenue collection (the taxes it collects to fund its expenditures) since it came into power. The SBP claims growth in FBR tax collection is at its highest in five years. The government has set its eyes on a revenue target of Rs 4.013 trillion for 2017-18.
Source: Ministry of Finance, Pakistan Bureau of Statistics, State Bank of Pakistan