SOPs’ adherence to dampen negative COVID-19 impacts, lead to sustainable growth

Dec 09, 2020: The negative impacts of coronavirus (COVID-19) could be dampened and economy would return to long-term sustainable growth path provided the standard operating procedures (SOPs) are strictly followed, Finance Ministry said.

“If the SOPs are strictly followed by the general public, it is expected the negative impact can be dampened and economy will return to long-term sustainable growth path,” the ministry said here in its recent report.

The report said that economic recovery, which was started since the start of the new fiscal year, continued in the month of October 2020.

However, looking at the impact of the ongoing coronavirus, the downside risks were becoming prominent, it said adding most importantly the recent increase in number of Coronavirus cases was forcing government to follow partial careful policy, especially in services sectors.

“Thus, like rest of world, economic outlook for Pakistan is also having a mixed message,” it added.

According to the report, the prospect for growth in agriculture were encouraging on the basis of better production of sugarcane and rice.

The government had announced “Rabi Package” which would encourage major and minor crops growers and it was expected that performance of agriculture would remain as per target or it might even surpass the target.

According to the report, the recent movements in large scale manufacturing (LSM) were coherent with the further economic expansion in the main trading partners, and with the deceleration of the strength of that expansion. Meanwhile, the report added, sufficient orders were available with the exporters for the coming months and it was expected that export sector would perform better in recovery in some of Pakistan’s main trading partners might exert a downside risk.

On the other hand, the persistent growth performance in Pakistan may lift imports marginally. The report termed the fiscal performance for Q1 FY 2021 as quite satisfactory, however, added challenges still persisted due to recent increase in number of corona virus cases.

The government continued to concentrate on expenditures related to COVID, both for economic revival and social relief, so it could build pressure on the expenditure side and increase public spending.

It added, the FBR tax collection performed better in the wake of activities during the first four months of current fiscal year.

However, with the increase in COVID infection and related containment measures, slower economic activities in services sectors might slightly impact revenue collection in Q2 FY2021.

The report said that economy was underway of recovery and witnessed strong growth in the first four months of the current financial year.

Furthermore, based on current information, no significant deterioration in the balance of trade in goods and services was expected. Also, the inflow of workers remittances remained strong. Therefore, the recovery might preserve external balance.

The external balance implies the prospect for a stable exchange rate in the near term, which might contribute, in addition to specific government measures, to reduce inflationary pressures, it added.

APP