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Pakistan

Pakistan's Prosperity Index reaches all-time high in November 2020: Report

  • On Monday, the Policy Research Institute of Market Economy (PRIME) released a report that stated that Pakistan's Prosperity Index continues to follow an upward trend, reaching an all-time high of 116.3 in November 2020.
  • Despite inflationary pressures and the second wave of the COVID-19 pandemic, over a 12-month period improvements in trade volume and output of large-scale manufacturing coupled with a modest increase in private sector lending led to an uptick in economic prosperity.
Published January 19, 2021
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ISLAMABAD: On Monday, the Policy Research Institute of Market Economy (PRIME) released a report that stated that Pakistan's Prosperity Index continues to follow an upward trend, reaching an all-time high of 116.3 in November 2020.

In its bi-monthly report on the Pakistan Prosperity Index, PRIME reviewed the country's macro-economic sectors on the basis of four periodic factors:

  1. Industrial Production.
  2. Trade Volume.
  3. Price Levels.
  4. Private Sector Lending.

This new PPI figure not only indicates economic recovery, but also provides a reason for optimism, as despite inflationary pressures and the second wave of the COVID-19 pandemic, over a 12-month period improvements in trade volume and output of large-scale manufacturing coupled with a modest increase in private sector lending has resulted in an uptick in economic prosperity.

The output of large-scale manufacturing increased by 1.35% in November 2020, as an ease in the lockdown, favorable interest and exchange rate policy coupled with cheap energy contributed to this increase.

To mitigate the impact of COVID-19, banks lending to the private sector has increased by 2% in November 2020, as the long-term financing facility has provided some respite to the private sector for resuming their business activities.

On the contrary, the second wave of the COVID-19 pandemic took its toll on global demand, in turn affecting Pakistan’s trade volume which continues to dwindle in the face of muted global demand.

Nonetheless, during November 2020 trade volume did see improvement as it increased by 5.8%. Purchasing power has seen a continuous decline following the first peak of COVID-19. M-o-M inflation hovered at 0.8% while Y-o-Y inflation measured at 8.3% in November 2020. Food inflation is a major concern for all and in particular for the low income households and this is likely to surge again denying the distribution of gains made in industrial and trade sectors.

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