Finance ministry releases report: Intensity of risks may hit domestic economic activities

ISLAMABAD: The exports from the country during the month of March 2022 are expected to continue their upward trend, backed by the export-oriented policies that have been implemented in the recent past, finance ministry said in a report.

The trade data for the month of March would be released by the Pakistan Bureau of Statistics (PBS) during first week of next month (April 2022).

According to Monthly Economic Update and Outlook, March 2022 released by the Finance Ministry, the stabilizing of the real effective exchange will also help exports in keeping the rising trend.

On the other hand, the imports would probably return to a level that is more in line with domestic economic activity and the levels of international commodity prices, it added. As a result, the trade balance may less deteriorate in Mar 2022 as well.

However, according to the report, the geopolitical risks still persist.

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The government measures designed to stimulate exports and discourage unnecessary imports are expected to contribute to constrain current account deficit.

The remittances are also expected to revert to normal levels during the month of March as in January and February, the inflows declined to lower levels mainly due to negative seasonality. Taking these factors into account, as well as its other components, the current account deficit is expected to stay well below the unsustainable levels observed during the period from Aug 2021 up to Jan 2022.

According to the report, the country’s overall economic performance continued to be strong and was still on a trajectory compatible with an economic growth target of around 5 percent in the current fiscal year. Its cyclical position has returned to a more neutral stance and if this trend continues in the next months, economic growth would be driven primarily by the expansion of manufacturing capacity.

However, the intensity of internal and external risks has still not been exactly realized which may adversely affect domestic economic activities.

It further said the inflation and the current account deficit were still under pressure and the government was taking measures to limit as much as possible further increases in the cost of living in the coming months.

The recent geopolitical tensions, in particular the Ukraine crisis, is the most important external risk factor, it added.

Likewise, domestic political conditions are building domestic risks. A further escalation of these risks could hamper the positive outlook for Pakistan’s economy and may also aggravate the macroeconomic imbalances, it added.