2015年-世界发展银行全球_Pakistan_Development_Update_April_2015_39页_1mb

Pakistan Development Update Summary - April 2015

Core Content

This document provides an overview of Pakistan's economic developments during the first half of the fiscal year 2015 (FY15), highlighting progress in key sectors, monetary and fiscal policies, inflation trends, and external economic factors. It also outlines risks and future outlooks for the economy.

Main Points

Economic Growth

• Growth Trends: Economic growth in FY15 is projected to be 4.3-4.6 percent of GDP, up from 4.1 percent in FY14, showing a gradual recovery.
• Sector Performance:
  • Agriculture: Expected to grow due to a bumper wheat crop, resilient livestock sector, and strong minor crop growth. However, major kharif crops like cotton and sugarcane showed weak performance.
  • Services: Strong growth driven by transport, storage, communication, finance, and insurance sectors. Scheduled banks also showed improved profitability.
  • Manufacturing: Large-scale manufacturing (LSM) growth remained weak due to domestic security issues, gas shortages, and declining demand for cotton yarn.

Monetary and Inflation Trends

• Monetary Aggregates: Broad money (M2) growth slowed to 4.0 percent in February 2015, compared to 5.0 percent in the same period in 2014.
• Inflation:
  • Headline Inflation: Reached a 13-year low of 4.0 percent in November 2014 and is projected to average around 5.5 percent for FY15.
  • Food Inflation: Declined significantly, from 6.6 percent in Q1-FY15 to 3.6 percent in Q2-FY15.
  • Non-Food Inflation: Also showed a marked decline, with a 33 percent drop from Q1 to Q2-FY15.
  • Core Inflation: Decreased from 8.5 percent in FY14 to 4.2 percent in February 2015.
• Policy Rate: The SBP reduced the policy rate multiple times, contributing to disinflationary pressures.

Fiscal Policy and Public Debt

• Fiscal Deficit: Contained at around 5 percent of GDP, slightly below the target due to lower-than-expected revenue from oil import taxes.
• Fiscal Consolidation: Continued through improved tax collection, reduced current expenditures (especially power subsidies), and small provincial surpluses.
• Public Debt: Remains above the 60 percent of GDP threshold under the Fiscal Responsibility Law but is on a decreasing trend.
• Government Borrowing: Shifted from the State Bank of Pakistan (SBP) to scheduled banks, which has contributed to lower broad money growth and reduced private sector credit.

External Sector

• Current Account Deficit: Remains modest at around 0.6 percent of GDP, supported by strong remittances and low oil prices.
• Foreign Exchange Reserves: Reached 2.5 months of next year's imports by December 2015, with expectations to reach a 3-month cushion in the second half of FY15.
• External Financing: Improved significantly, with USD 1 billion placed in Sukuks in international markets under favorable conditions.

Risks and Outlook

• Domestic Risks: Political uncertainty, security concerns, and weak performance of the energy sector.
• External Risks: Possible reversal of the international oil price decline and its impact on inflation and fiscal sustainability.
• Market Sentiment: The EMBI+ risk spread has declined, indicating improved confidence in the government's reform program.
• Medium-Term Outlook: Economic activity is expected to continue improving slowly, with the services sector likely to remain a key driver of growth.

Key Information

• Growth Drivers: Agriculture, services, and private consumption (supported by high remittances).
• Challenges: Weak manufacturing growth, energy shortages, and ongoing issues with circular debt.
• Policy Successes: Fiscal consolidation, improved tax collection, and successful external financing.
• Inflation Control: Achieved through lower oil prices, better supply-side management, and reduced government borrowing.
• Future Prospects: Continued focus on structural reforms and maintaining fiscal discipline.

Structural Reforms

• Progress: The government has made progress in implementing structural reforms, supported by the IMF, World Bank, and other donors.
• Reforms Implemented: Tax contingency measures, reduction in energy subsidies, and improvements in business registration processes through the One Stop Shop (OSS) initiative.
• Fiscal Discipline: The newly elected government is committed to fiscal consolidation as a key part of its economic strategy.

Conclusion

Despite facing several domestic shocks, Pakistan's economy is showing signs of improvement, supported by low oil prices and steady reform implementation. The government's commitment to fiscal discipline and structural reforms has helped in keeping the fiscal deficit under control and improving the external position. However, ongoing risks such as political instability, energy sector challenges, and potential reversal of oil price declines remain. The outlook for the economy is cautiously optimistic, with continued focus on maintaining macroeconomic stability and promoting growth.