GDP growth expected to rise 3.94pc as post-Covid recovery strengthens: SBP

The State Bank of Pakistan has said that the FY21 growth is expected to rise to 3.94 percent, as post-Covid recovery underway since last summer has strengthened.

In a statement on Monday, the central bank said that the nine-month current account is also in surplus for the first time in 17 years and the foreign exchange reserves are at a four-year high. “This rebound was fueled by a well-calibrated policy response,” said SBP.

Given high public debt, fiscal support was targeted to the most vulnerable, notably through the globally-acclaimed Ehsaas program, said SBP. "At the same time public debt and deficit were kept under check which has supported market sentiment, investment outlook, and economic recovery," it added.

SBP said that it provided a targeted economic stimulus of Rs2 trillion to support the recovery through interest rate cut, principal deferment & loan restructuring, Rozgar payroll finance scheme to prevent layoffs, and concessional finance for investment in industry and health facilities.

The SBP on Saturday night said the provisional estimate for FY21 growth of 3.94 percent released by the National Accounts Committee (NAC) on Friday reflects the strong economic recovery underway since the beginning of this fiscal year, which has been highlighted in recent monetary policy statements and quarterly reports of the SBP.

SBP said that it had raised its own growth forecast in March on the basis of buoyant economic activity reflected in different high frequency data.

“This was done in an appropriately conservative manner while noting upside risks to growth. Data received since then, and discussed in the NAC, suggest these upside risks have materialized,” said SBP.

According to SBP, in some sections of the media, needless apprehensions are being cast about the deliberations that took place in the NAC on Friday and SBP‘s views.

Finance Minister Shaukat Tarin in a presser on Sunday also said that figure of 3.94 percent should not be made controversial because it was worked in a very transparent way by the Planning Division and Finance Division has nothing to do with it.