Foreign Pakistanis send money to Pakistan is considered to be one of the major support to the economy of the country. According to a recent estimate, the Pakistani economy will resume growth in the current fiscal year 2020-21, but the business investment will remain below pre-outbreak levels. According to the Pakistan Development Update released today, Pakistan’s economic growth is projected to hit 1.3 percent in FY2021 and then strengthen to an average of 2.7 percent in FY2022-23. However, given the third and most infectious wave of the pandemic currently circulating in the world, the baseline economic growth forecast is inherently unpredictable.
Between July and December 2020, private consumption is expected to increase, owing to a record increment in remittances [money transfer to Pakistan from abroad by expatriates], social assistance funding from the Ehsaas scheme, the government’s development package, and a return to pre-COVID mobility levels from September 2020. Machinery imports and cement sales grew by double digits during this time span, indicating that investment is improving.
Pakistan’s key trading partners, such as the United States, the United Kingdom, and several countries in the Eurozone, have recently taken additional steps to combat the virus’s spread. The catering industry and personal services have been hit the hardest by these steps. The manufacturing and government services industries, on the other hand, are still operational. Similarly, the service sub-sectors that bring the most value are continuing their operations. As a result, the new restrictions are unlikely to trigger the same drop in economic activity that occurred during the first Coronavirus wave last year.
What Are The Major Sectors Showing Rapid Growth During Fiscal 2021?
Pakistan’s economy is on the mend, with key economic indicators indicating positive outcomes in the current fiscal year. Because of the improvement in the manufacturing industries and online money transfers to Pakistan by overseas Pakistanis, the country’s GDP growth could reach 3% in the financial year 2020-21. As per the Ministry of Finance data details, the Large Scale Manufacturing (LSM) sector has been growing steadily over the current fiscal year.
In January 2021, the LSM exceeded its pre-COVID production pace, increasing by 9.1 percent on an annual basis, compared to (-5.7) percent in the same timeframe of the previous year 2020. The country’s car industry is also showing signs of improvement. Between July and February of 2020-21, tractor production and sales increased by 52.9 percent and 52.6 percent, respectively. The central bank reported recently that overseas Pakistanis working abroad send money to Pakistan online is increased to $2.8 billion in April, up 43 percent year on year and 20 percent from the previous month.