Wednesday Sep 16, 2020
A drop in coronavirus cases along with an increase in foreign remittances and positive signs in the automobile, construction and manufacturing sectors has indicated that Pakistan's economy has the potential to grow, reported UAE based publication Khaleej Times.
The publication cited the newly released data from the State Bank of Pakistan (SBP) showing remittances from non-resident Pakistanis had topped $2.1 billion in August, showing an increase of 24.4% year-on-year basis.
"Efforts under the Pakistan Remittances Initiative [PRI] and the gradual re-opening of businesses in major host countries such as Middle East, Europe and United States contributed to this increase in remittances," the publication quoted SBP.
The article also noted that Pakistan had recorded over 300,000 COVID-19 cases, with a recovery rate of 96%.
"It has surprised everybody," Muzzammil Aslam, chief executive officer at Tangent Capital Advisors, told Bloomberg about the pandemic in the country.
Aslam was quoted by the publication, saying that he expects Pakistan's economy to grow by 4-5% in the ongoing fiscal year 2020-21. The projection is much higher than the government's 2.1%.
"The growth is led by an aggregate demand push," said Aslam.
While, the International Institute of Finance (IIF) last month said Pakistan's economy could grow by 1.8%, triggered by a recovery in private consumption.
The Khaleej Times also shared that IIF has also backed the projection by the increase in cement sales by 38% to 4.8 million in July due to the uptick in construction activity after the federal government provided incentives for housing projects.
"We expect dispatches to continue their rising run moving forward because of tax measures," Saad Khan, research head at IGI Securities, told Bloomberg.
"A substantial decline in interest rates and mandatory targets given for banks to increase housing and construction financing to at least five per cent of private sector credit will also help," he added.
However, President of the Pakistan Business Council in Dubai Iqbal Dawood believes the increased inflow of remittances could be due to a large number of people returning home after losing jobs in the Gulf region and taking their savings with them to invest in Pakistan.
"A large number of people are moving back due to the economic situation and they are relocating their funds. If there is a political stability in the country and government provides better infrastructure, FDI and remittances inflow will grow substantially," said Dawood.
When asked about the economic recovery, Dawood said that the new construction package and government incentives are boosting the growth. He also called the Roshan Digital Account a game-changer, which was launched last week to attract more remittances and FDI.
Meanwhile, official data indicates that petrol sales in June rose to a record high after people returned to work as lockdown measures were eased.
Similarly, car sales also rose to 10,000 units as the lockdown was lifted. The manufacturing output also grew for a second consecutive month in June and is likely to pick up further in months ahead as global economies also recover.