Pakistan Prosperity Index dips amid third COVID peak: Report

After a 5-month high, Pakistan Prosperity Index took a dip in February 2021 standing at 124.2, revealed Policy Research Institute of Market Economy (PRIME) in its report on Pakistan Prosperity Index (PPI)

This figure signals a decrease in economic prosperity largely driven by reduced business confidence amid the 3rd peak of Covid-19.

Year on Year inflation increased in February 2021 hovering at 8.7 percent. This inflationary pressure has been on account of an increase in prices of basic food items and electricity tariffs.

Output of large-scale manufacturing decreased by 4.15pc MoM in February 2021. The industry posted negative growth owing to rising cost of production and imposition of micro smart lockdown amid third wave of the pandemic.

Trade volume falls for the second month in a row measuring at Rs. 1.06 trillion in February 2021.

Private sector borrowing from banks has been on the rise owing to a subsidized borrowing rate. o Long-term financing facility stood at an all-time high of Rs. 310.7 billion in February 2021.

Despite the increase in private sector borrowing, economic prosperity as measured by Pakistan Prosperity Index fell in February 2021 on account of a fall in trade volume, LSM’s output and purchasing power. These indicators have worsened due to reduced business confidence and rising inflationary pressures amid the third wave of pandemic.

Despite the measures taken by the government to shore up economic activity, the economic recovery of past few months has been challenged by the inflationary pressures and re-imposition of smart lockdowns which have weakened the business sentiments, stated the report.

At present, with the Covid-crisis looming, the country cannot afford another stringent lockdown it said as it will further dampen the growth prospects of industrial and financial sector.

The current circumstances therefore call for a mass vaccination drive where the government should encourage the private sector to procure and administer the vaccine under regulatory watch. In the meantime, the government should facilitate the private sector by streamlining the regulatory and administrative procedures in order to provide breathing space to the businesses and tackle food inflation by opening the trade of essential food commodities which will balance the stock and prices.