June 10, 2021 (MLN): Pakistan’s economy witnessed a V-shaped economic recovery in the fiscal year 2020-21 due to policy measures taken by the government while adding that wholesale and retail trade lost maximum workers followed by manufacturing, construction, and transport, Ministry of Finance said in its Pakistan Economic Survey (PES) released on Thursday.
“Despite strict fiscal constraints, timely and appropriate policy measures taken by the government resulted in a V-Shaped economic recovery. Economy of Pakistan rebounded strongly in FY2021 and posted growth of 3.94 percent which is not only substantially higher than the previous two years (-0.47 and 2.08 percent in FY2020 and FY2019 respectively) but also surpassed the target (2.1 percent for FY2021),” said the PES 2020-21.
The PES noted that ever since the ‘smart lockdowns’ were enforced by the government between March 2020 to May 2020, the economy has since recovered from its trough.
Pakistan’s economy went through the worst GDP formation witnessing a contraction of -0.47%.
“Smart lockdown in March 2020 to May 2020 and in the next few months for numerous businesses led to decline in economic activity in the last quarter of 2019-20. The drop-in activities were so severe that normal expected GDP growth has declined from 3.3 percent to negative 0.47 percent, which was partly cushioned by the introduction of the construction sector package in June 2020,” said the PES 2020-21.
The economic rebound was supported by massive monetary-fiscal stimulus extended by the Ministry of Finance and the State Bank of Pakistan (SBP).
After analyzing the initial status and possible repercussions at the NCOC, Government came up with Rs 1.24 trillion stimulus packages, it said.
Besides this stimulus package, several other policy measures were taken to reduce the incidence and deaths due to COVID-19 and salvaging economy.
In addition to the sharp cut in the policy rate, the SBP also unveiled a range of measures including deferral on payments of loans, refinancing facilities, relaxation of debt burden ratio for consumer loans, relaxing credit requirements for traders, etc.
Meanwhile, the finance ministry further said that the government will continue to take the necessary measures for achieving a higher, sustainable, and inclusive growth rate.
Increased size of the Public Sector Development Programme, better containment of pandemic along with the roll-out of vaccination and continuation of Ehsaas Programme will keep the momentum of the economic growth.
As per the preliminary reports, the government plans to set a PSDP target of Rs900bn for FY22 with the majority of development initiatives in the energy and promotion of social, regional equality across the country.
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