Economic Update & Outlook: July statement characterised by absence of key info

ISLAMABAD: The July 2024 Economic Update and Outlook, a regular monthly publication by the Finance Division, is marked by what it leaves out rather than the analytical information that it contains.

There are no final remarks, no statistical appendage and no reference to credit to the private sector and conspicuous by absence of public sector development program releases.

This correspondent tried to contact a senior official to know whether these changes were effected/approved by the Minister of Finance who has to sign off before the update is uploaded however there was no response till the filing of this report.

On Tuesday, Finance Division Economic Adviser’s Wing has uploaded, “Monthly Economic Update & Outlook for July 2024” that noted that Pakistan’s economy moved towards stability in fiscal year 2024 with decreasing inflation, a surplus in the primary fiscal account (Jul-May), a negligible current account deficit, and a stable exchange rate. In the real sector, agriculture outperformed, whereas large-scale manufacturing is set to take off.

In June 2024, CPI inflation reached the point of the single-digit range. The external account position improved due to contained imports resulting from prudent fiscal and monetary management, while exports and remittances increased significantly.

The government managed to reduce the fiscal deficit to 4.9 percent of GDP in Jul-May 2024, from 5.5 percent last year. The primary balance showed a surplus of Rs1,620.5 billion (1.5 per cent of GDP) in contrast to a deficit of Rs112 billion (-0.1 per cent of GDP) last year.

This was achieved by increasing revenue and keeping non-interest spending in check. During July-May 2024, net federal revenues reached Rs6,202.6 billion, a 49 percent increase from the previous year, driven by tax and non-tax collections. Non-tax revenues saw a 90 percent increase, supported by higher SBP profits and increased petroleum levy.

The large scdale manufacturing (LSM) expanded 1 percent during Jul-May 2024, compared to last year’s contraction of 9.6 percent. In fiscal year 2024, tractor production reached 45,529, marking a 43.5 percent increase over previous fiscal year. Tractor sales also rose by 47 percent to reach 45,494.

Agricultural credit disbursement reached Rs1,972.8 billion during Jul-May 2024, 26 percent up from previous year. However, due to the cobweb phenomenon, the sowing area of cotton decreased in Punjab (1.304 million hectares against the target of 1.680 million ha) and Sindh (0.550 million ha against the target of 0.630 million ha).

Similarly, for Kharif sowing of 2024 (April-June), urea offtake remained at 1,210 thousand tonnes, 18.1 percent less than Kharif 2023, while DAP offtake was 256,000 tonnes, 6.8 percent less. However, improved quality cotton seed availability has been ensured in both Punjab and Sindh, which will likely improve yield, provided the weather remains favourable.

However, compared to the previous year, local dispatches and exports declined in June 2024, reaching 3.1 and 0.58 million tonnes, respectively.

The automobile sector struggled due to high interest rates and import restrictions, resulting in a 22.0 percent and 15.7 percent decrease in car production and sales, respectively. Similarly, truck and bus production and sales decreased by 30.5 percent each.

Copyright Business Recorder, 2024