KARACHI: Exports and imports both reached the highest-ever level in the first quarter of fiscal year 2021-22 (1QFY22) which convinced the government to achieve 5.5 per cent economic growth, said a report issued by the Ministry of Planning and Development on Friday.

“Growth responsiveness to stimulus package is more than anticipated and thus the economy is likely to surpass the annual growth target by a fair margin likely in the range of 5-5.5pc,” the First Quarterly Economic Review for FY22 said. The government has set 4.8pc growth target in the budget for FY22.

“The growth rates are indicative signs of continued economic growth. However, the structural problems of balance of payments constrained growth have rapidly become more pronounced as imports surged to highest ever level in tandem with rising aggregate demand,” said the report.

The review noted that at a time when the developing world is grappled with rising debts, Pakistan’s external debt recorded its slowest build-up in last five years.

External debt shows slowest build-up in last five years, says ministry report

Exports recorded highest ever average monthly level of $2.4 billion in 1QFY22 as well as highest ever in a single quarter at $7.2bn on shipment basis.

Exports of services sector fetched highest value in 1QFY22 since 2016; however, if government services are excluded, then it is the highest-ever.

“However, government services accounted for more than 50pc of services exports during 2013 to 2016 which has now reduced to just 13pc in 1QFY22,” the review said.

Imports again surged to their highest-ever level in single quarter at $17.5bn and recorded 64.3pc growth during 1QFY22 to cater for growing economic activities in the country, said the report.

“Import of textile machinery surged by 144pc and textile group imports surged by 76pc,” it said.

Foreign investment inflows (net) went up by 323pc during 1QFY22 compared to the last year. Portfolio inflows increased to $880 million compared to net outflow of $146m in the comparable period, said the report.

Credit to private business has witnessed phenomenal increase of 318pc in the 1QFY22 to Rs190bn as against net retirement of Rs87bn in the corresponding period of last year, said the report. “This reflects signs of increasing economic activity in the country,” said the report.

The report noted that FY22 started off with positive prospects for economic growth revival as industrial and services sector activity picked up and agriculture sector performance looked impressive as far as first estimate of Kharif crop is concerned.

Cotton picking has started since month of August and data shared by the Pakistan Cotton Ginners Association (PCGA) shows highly encouraging trend of cotton arrivals, the report said. PCGA data for October 15, shows that cotton arrivals till date are 93.7pc higher than the corresponding month of last year, it added.

Sugarcane output may increase this year mainly due to increase in crop area, ample water availability, effective and timely crop management activities because of higher sugar price and better sugarcane procurement price in the market, the report said.

Reviewing the industrial sector, the report said 24pc growth in oil sales was reported by the Oil Marketing Companies. “112pc growth in production of cars shows phenomenal economic activity during the 1QFY22 in the manufacturing sector,” it added.

Aggregate demand pressures are evident from 84pc rise in car sales in the 1QFY22, 65pc increase in imports and massive spike in demand for consumer credits, it said.

Demand of high-speed diesel has increased by 26pc whilst petrol consumption has risen by 14pc and electricity consumption rose by 13pc during 1QFY22, the report added.

Published in Dawn, November 27th, 2021