The central bank, in its report, said that Pakistan’s economic growth was unlikely to meet the fiscal target of four percent because of soft agricultural and manufacturing trends.
The State Bank of Pakistan (SBP) also advised the government to address weaknesses in the system to place the economy on a trajectory of sustainable growth.
Commodity-producing sector output is likely to remain subdued, the SBP said in its report. “In view of these trends, it seems impossible to reach the 4% real GDP growth goal,” said the SBP.
The Central Bank’s report describes the challenges facing the economy in thorough detail, including contradictions related to quantity of exports and earnings, delays in implementing tax reforms, and poor control of food prices.
“Most of the improvement in the current account has come from a reduction in the country’s import bill; exports have yet to contribute significantly, as healthy quantum gains are not supported by price trends,” the SBP said.
In addition, while the foreign reserves drawdown has been reversed, the overall reserves position remains below the level of comfort, that is, in terms of import coverage.
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The report also highlighted that the average inflation headline consumer price index (CPI) reached 11.5 percent in Q1-FY-20, extending the steep upward trend that has persisted since the start of FY-19.
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Not only was this level double the inflation observed last year in the same quarter, but it was also the highest quarterly inflation level observed since Q4-FY-12.