Yearender: Pakistan's economy continues to move forward amid COVID-19

Source: Xinhua| 2020-12-30 19:47:25|Editor: huaxia

by Raheela Nazir

ISLAMABAD, Dec. 30 (Xinhua) -- As economies around the globe have remained under intense pressure owing to the COVID-19 pandemic, the Pakistani economy is showing encouraging signs of a promising recovery with improved economic indicators.

The country's economic experts believed that despite the testing times, the national economy is heading towards the right direction as the government's extensive measures have helped it move progressively on the adjustment path in a stabilization process.

According to a recently released Asian Development Bank (ADB) report on development outlook, Pakistan's economy has been getting better despite the persistent challenge of COVID-19.

"Pakistan's economy is recovering, particularly in the manufacturing and construction sectors, supported by the government emergency relief," said the report, a regular supplement to the Asian Development Outlook (ADO) 2020.

Quoting data released by the country's central bank, Pakistani Prime Minister Imran Khan said that the improved economic indicators herald new pace in the economic development of Pakistan despite enormous challenges brought by the pandemic.

"...despite COVID-19, great news on economy -- remarkable turnaround," Khan said in a tweet last week, adding that Pakistan's total current account surplus during the first five months of the current fiscal year from July to November rose to 1.6 billion U.S. dollars against a deficit of 1.7 billion U.S. dollars during the same period last year.

The current account balance turned surplus as the government had made prudent and timely policies to maintain a healthy balance between imports and exports, and sustainability in remittances by overseas Pakistanis, Talat Anwar, a renowned economist and former advisor on macroeconomic policy at the Ministry of Planning, Development and Special Initiatives, told Xinhua.

"Resultantly, the Pakistani rupee strengthened against the dollar due to less demand from importers and considerable inflows of the greenback into the country," Anwar said, adding that rupee is expected to remain strong in the coming period.

Workers' remittances maintained a strong momentum, remaining above two billion U.S. dollars for a record sixth consecutive month in November. The remittances grew to 2.34 billion U.S. dollars, up 2.4 percent over the previous month and 28.4 percent over November 2019, according to the recently released statistics of the State Bank of Pakistan.

Pakistan also witnessed a growth of over six percent in large scale manufacturing in October 2020 as compared to the same month a year earlier, and the exports have increased to 9.732 billion U.S. dollars in the first five months of the current fiscal year as compared to 9.545 billion U.S. dollars a year earlier, according to the official statistics.

Secretary of the Economic Affairs Division of Pakistan Noor Ahmed said that when the COVID-19 pandemic struck the world, the Pakistani government was confronted with challenges including saving the lower classes of the society from the adverse impact of COVID-19 and supporting local businesses to run the wheel of the already struggling economy.

"The government took corrective measures to protect the country from bankruptcy by rolling out a multi-billion-rupee coronavirus relief package," Ahmed said, adding that the much-needed subsidies given to the construction sector spurred economic activities and helped the lockdown-bruised economy recover from the slump.

He said Pakistan has an import-based economy, which he said is one of the main factors of inflation in the country. "Realizing the negative impact, the government has been making all-out efforts to switch from the import-based economy to export-based by strengthening the local industries."

Among other indicators placing economy on a positive trajectory is Pakistan Stock Exchange (PSX), which has remained one of the best performing markets in Asia during the pandemic.

The market fell to its lowest towards the end of March this year due to uncertainties and qualms caused by the coronavirus news. However, it picked up gradually after that, with the key index reaching above the 43,000-mark in December from the 27,000-mark in March, according to PSX experts.

To cushion the negative impact of COVID-19, the Pakistani government has also provided new impetus to accelerate the pace and implementation of China-Pakistan Economic Corridor (CPEC) projects, Shakeel Ahmad Ramay, a political economist and director of China Study Center at the Sustainable Development Policy Institute, an Islamabad-based think-tank, told Xinhua.

According to Pakistan's Board of Investment statistics, around 40,000 Pakistani employees were working for the CPEC-related projects during the pandemic. The fact means that 40,000 households are benefiting from the CPEC program, Ramay said.

Ramay said that CPEC has been playing a multi-dimensional role in Pakistan's economy, even during the pandemic when the whole world came to a standstill with lockdowns imposed, CPEC was going on as both countries decided to maintain the pre-pandemic pace of its construction work.

"Not only the work was going on, both countries decided to expand CPEC and different areas of cooperation," he said, citing hydropower projects of national importance, including Kohala and Azad Pattan hydro projects, which are expected to generate thousands of jobs.

In addition, he said that the upgrade of the Main Line-1 railway, another big CPEC cooperation project, which was approved in August, will further boost Pakistan's economy and create jobs for the local residents. Enditem