Staff Reporter
Islamabad
Pakistan’s economy would expand by around 1% in the first quarter of the current fiscal year but remittances would go down to their monthly average of around $2.2 billion, the finance ministry.
The ministry’s monthly Economic Updates and Outlook report for the month of August also revealed that the Federal Board of Revenue exaggerated tax collection by Rs10 billion for the month of July.
The monthly bulletin of the ministry also showed that inflation would remain at its current level and there was less money available for private sector borrowings during the first five weeks of the current fiscal year.
“Given current information, economic activity in Q1 of FY2021 would recover at least around the level observed in Q1 of FY2020”, according to the finance ministry report. In its previous outlook for the month of July, the ministry had stated that the economy had grown by 0.97% in first (July-September) quarter of last fiscal year. In the last fiscal year, the economy contracted 0.4%, largely because of the spread of the coronavirus pandemic.
The ministry said that the economic recession, following the impact of the Covid-19 pandemic, was coming to the end. Based on high frequency indicators, summarised in the Monthly Economic Indicator (MEI), economic growth resumed in June and July 2020, it added.
The MEI marginally picked to 1.4% in July from 1.3% in June. Based on current economic, fiscal, monetary and exchange rate policies and on the prospects for the international environment, the ministry said, economic activity was expected to rebound strongly within the Q1.
The finance ministry said that recession in industrial output will be tempered in recent months, which is also an indication of economic recovery due to lifting of lockdown throughout the country. The trend would continue in July 2020 and further improvement is expected in coming months.
On the external front, the ministry said that the trade balance on goods and services would 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.
