SBP projects up to 5% economic growth despite challenges

• The central bank projects the economy to grow strongly in the range of 4-5% in the current fiscal year 2021-22
• Although there are many challenges including exponentially high global commodity prices, elevated import payments, increase in utility tariffs, higher inflation and expansion in services deficit.
• Remittances are expected to remain upbeat amid recovery in the global economy.

According to the economic outlook section of the State Bank of Pakistan’s (SBP) Annual Report 2020-21, “Economic recovery during FY21 is projected to gain further momentum in FY22.”

The momentum in growth is evident from the significant increase in machinery and raw material imports, continued expansion in consumer financing, and strong uptrend in domestic sales as seen from high frequency demand indicators during the initial months of FY22.

“Partly capturing these dynamics, the SBP is projecting GDP (gross domestic product) growth in the range of 4-5%.”


The national Consumer Price Index (CPI) inflation is expected to remain within a range of 7-9%. The SBP recommended that better commodity management practices, especially the build-up of reserves for wheat and sugar, would likely contain supply side pressures from seeping into inflation during FY22.

Rise in imports

On a positive note, this increase in imports also reflects increase in machinery, much of which is supported by TERF that should help to augment future productive capacity.

“In this scenario, the current account deficit is projected in the range of 2-3% of the GDP during FY22,” SBP.

Remittances are expected to remain upbeat

The annual report said a part of the expansion in the import payments is projected to be financed through a consistent increase in the workers’ remittances and export receipts. Particularly, remittances are expected to remain upbeat amid recovery in the global economy.

The outlook for financial flows is likely to remain conducive.

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