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ISLAMABAD: The government Friday said the economic growth of 3.94 percent for the outgoing fiscal year would bring about sustainability in both the short as well as long-run thereby bringing better prospects of economic growth outlook.

The Finance Ministry in its Monthly Economic Update and Outlook for May 2021 noted that the rebound in economic activity was a sign of recovery from sharp output contractions.

Monthly Economic Indicators (MEI) of April continued to point to positive economic growth despite some sectors in the economy were still suffering from the current wave of Covid-19 infections and the related measures to safeguard people’s health. The higher economic growth had recorded along with stabilisation due to the government's focus on certain targeted sectors such as housing, agriculture, industry, construction and exports, said the Finance Ministry.

There are expectations that in the coming years, the economy would have sustainable and inclusive growth through government initiatives for utilising bottom-up approach. The recent estimates of crops provided by the Pakistan Bureau of Statistics (PBS), that all major crops surpassed their respective set targets. The bumper production of wheat (27.3 million tons) was indicating that agriculture emergency program has started bringing fruits not only to agriculture sector but to the whole economy. The Ministry added that the agriculture sector would continue to perform well on account of continuing support of the government to the sector. The recent estimates of crops provided by the Pakistan Bureau of Statistics (PBS) showed that all the major crops surpassed their respective set targets and bumper production of wheat (27.3 million tons) is an indication that the government agriculture emergency program has brought fruits not only to agriculture but to the whole economy. The credit to the agriculture sector was disbursed at Rs953 billion during July-April 2021 as opposed to Rs912.2 billion for the same period a year before While continued strong positive year-on-year growth in large scale manufacturing (LSM) is expected in the month of April 2021 as well.

On inflation, the monthly update noted that nearly half of this increase in inflation in April 2021 to 11.1 percent from 9.1 percent in March was due to base effects and the remaining part to new price impulses. The contribution of the base effect to inflation acceleration was observed in many countries such as Turkey (17.1 percent), Iran (49.5 percent) etc.

The fiscal deficit during July-March 2021 was limited at 3.5 percent of GDP against 4.1 percent of GDP (revised) in the comparable period of fiscal year 2020. Similarly, the primary balance posted a surplus of Rs451.8 billion (0.9 percent of GDP) during July-March 2021 against the surplus of Rs193.5 billion (0.5 percent of the GDP) in the same period of fiscal year 2020.

Copyright Business Recorder, 2021

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