Economy: govt’s growing optimism

In a rather surprising yet welcome development the government has come up with rather bullish figures on Pakistan’s economy for fiscal year 2021-22. It has taken the opposition parties by surprise who have been damning the government by presenting to the public their narrative of the messed up economy and high inflation as a single-point agenda to oust the government. The federal government last week approved an economic growth target of 4.8% and estimated inflation to remain at 8% for the next fiscal year 2021-22; its fourth year in office.

The positive development is largely attributed to the expected growth in foreign remittances, exports and manufacturing, services and agriculture sectors.

Asad Umar, the Federal Minister for Planning and Development, has spelled out the targets for the next fiscal year. The minister said foreign remittances are expected to peak to $29.3 billion in this fiscal year. The agricultural sector is expected to grow by 3.4% in the next fiscal year as against 2.8% in the ongoing one.

The services sector is projected to grow by 4.7% as against this year’s estimates of 4.4%. Industrial sector’s growth target is 6.8% compared to this year’s growth estimate of 3.6%.

Manufacturing sector’s growth target is 6.2% and large-scale manufacturing’s 6%. Electricity generation is targeted to grow by 6% next year. National savings are projected to increase to 14.2% as against 13.9% of the GDP this year. The total investment is also projected to increase to 16% of the GDP as against 15.2% this year.

The minister said the APCC had approved the current account deficit target at 0.7% of the GDP or $2.3 billion.

The government has approved exports target at $26.8 billion — higher by only $1.6 billion or 6.3% against this year’s estimated exports.

The import target is $55.3 billion — up by $4.9 billion or 9.7%. The trade deficit is projected to widen to $28.4 billion in the next fiscal year — up by $3.2 billion or 12.7%.

Considering the negative impact of Covid waves and when benchmarked to other economies around the world, the economic growth figures presented by the PTI government are impressive.

The year 2021- 22 will witness the hype of vote politics driven by the treasury and opposition benches alike. The country’s economy will be one subject which will be played around the most by both, notably, in the areas which affect the masses. The incumbent government will be dedicating the next two years of its tenure to the economy for the masses – which means managing inflation and pushing ahead its Ehsaas programme for the masses. During this phase, funds will also be doled out to legislators to enable them to come up with projects favourable to their vote bank.

Time for strategic actions like privatisation of State-Owned Enterprises (SOEs), managing circular debt by increase in utility tariffs, accountability of politicians and alike and similar measures in larger national interest is more or less over.

The new economic team has accordingly set its goals for the next two years. Its agenda is characterized by two points: (i) inflation and (ii) revenue generations to fund social programmes for the masses.

Having achieved this, the incumbent government can step into the next general elections of 2023 with better chances of success. Equally important for the government in its remaining tenure will be its resistance to the temptation of being one step ahead of the opposition in political bickering. It should spare itself and the nation the temptation of being distracted from the core target of building up the nation’s economy.

(The writer is a former President, Overseas Investors Chambers of Commerce and Industry)

Copyright Business Recorder, 2021