01/05/2023
The report shows Pakistan registered growth in wheat production, revenue collection, and fiscal inflows, while the LSM sector and inflation were disappointing.
According to IMF global economy is to face a decline of 2.8% in 2023 due to increasing inflation worldwide, Russia Ukraine war as well as the Chinese recovery from covid. But expected growth in the economies of Pakistan's trading partners like the USA and China will have a spillover effect on Pakistan's economy.
The recent report by the finance division of the government of Pakistan shows that the agriculture sector of Pakistan in Rabi 2022-23 performed well. Wheat production increased by 1.6%, while potato showed a growth of 1.9% and tomato by 1.2 but unfortunately, gram production declined by 1%. Also, during Jul-mar FY2023 AGRICULTURE CREADET disbursements increased by 263.6 billion. Also, the input situation in Kharif 2023 will be satisfactory.
On the other hand, the LSM sector lagged with a decline of 5.56% during Jul-Feb FY2023, which was caused by policy measures for imbalances, disrupted supply chain, and global recession but 4 sectors including wearing apparel, leather products, furniture, and football showed positive growth. While increased input prices, tightened auto finance, and import restrictions declined car manufacturing by 43.3% and sales by 50.3% with the sale of petroleum products also declining by 21%. Cement dispatches declined by 17.65 but export shipments surged by 48.65.
Battle of Pakistan for inflation also faced defeat by 3.7% at 35.4% compared to last month which was 31.5.
The total federal reserves of Pakistan increased by 32% in Jul-Feb FY2023 this growth was supported by 18% growth in taxed revenue and 35% in non-tax revenue. The increase in non-tax revenue was supported by higher petroleum levies, higher markup payments, dividends, PTA profit, passport fees, and royalties on oil and gas during the first eight months of the fiscal year. On the other hand, total expenditure grew by 11.5%. this sharp increase in revenue decreased the fiscal deficit by 2.8%.
During the first nine months of the fiscal year FBR provisional tax collection increased by 18% to 5156 billion rupees compared to 4376 billion in the last year. While in the month of march, it grew by 15% to 662 billion. Tax collection was below the target due to import contraction and domestic and global economic situation. Component wise direct tax increased by 46 % while indirect tax grew by 1.8%.
The monitory policy committee increased the policy rate by 100 basis points to 21% on the 4th Aprile due to higher inflation. While in March money supply showed a growth of 4.3%.
While the current account posted a surplus of $654 million mainly due to the contraction of imports. Total exports during Jul-Mar FY2023 stood at $21 billion ($23.3 billion last year) and declined by 9.8 percent. Major exports were raw cotton, fish, footballs, foot wears, surgical and medical instruments, and pharmaceutical products. Total imports were $43.9 billion ($ 58.8 billion last year) and thus declined by 25.4%. major products were petroleum, medicinal products, natural gas, palm oil, plastic material, and iron & steel.
FDI during Jul-Mar FY2023 decreased by 22.5% compared to last year. Worker remittances decreased by 10.8% and foreign exchange reserves stood at 10 billion on 26 April.
