The Pakistan Economic Survey is an important document full of information and data about all aspects of the national economy. Traditionally, it is released on the eve of the announcement of the new federal budget. It normally covers the period of the first nine to ten months of the outgoing financial year. The FY 2021-22 edition of the Pakistan Economic Survey was released on June 9, 2022, and the Federal Budget for the new financial year 2022-23 was presented in the National Assembly on June 10, 2022.

The survey gives a somewhat detailed and realistic view of the performance of the national economy vis-a-vis all the important sectors. The latest edition of the survey, which is being discussed here contains an overview of the economy, both global as well as national, and 16 chapters which pertain to growth and investment, agriculture, manufacturing and mines, fiscal development, money and credit, capital markets and corporate sector, inflation, trade and payments, public debt, education, health and nutrition, population, labour force and employment, transport and communication, energy, social protection and climate change and also contains statistical appendix regarding economic and social indicators.

Historically, Pakistan’s economy had shown periodic boom-bust growth cycles. The reasons for such volatile growth cycles include wide-ranging economic challenges like shrinking fiscal space, exchange rate pressure, mounting current account deficit, inflation, energy sector bottlenecks and the absence of a supportive environment for the private sector.

Though the national economy recovered from the adverse impact of the pandemic of COVID-19 after suffering a 0.94 percent drop in FY 2020 and managed to maintain a v-shaped recovery by posting real Gross Domestic Product (GDP) growth of 5. 97 percent in the fiscal year 2022. This high growth, however, is unsustainable and has resulted in financial macroeconomic imbalances in the country. Political instability in the country had also led to a huge increase in economic uncertainty. Uncertainty at the individual, firm and government levels was negatively affecting the national economy, to say the least. Political stability can reduce uncertainty by making clear policy statements to build the trust of domestic as well as foreign investors and the business community.

The coordinated monetary-fiscal policy approach after the COVID-19 outbreak had succeeded in reviving real economic activity in the country. Specifically, fiscal-monetary stimulus packages had a cascading effect on growth through a revival in private investment. Additionally, the accommodative monetary policy stance in FY2021, focused on the revival of the construction industry and mandatory housing finance targets by the State Bank of Pakistan together with the rebound in the external demand set the stage for stronger growth momentum in FY2022.

Furthermore, according to the information available, the growth momentum was also observed on the account of broad-based expansion in large-scale manufacturing and improved crop production. However, the national economy also started showing signs of excess demand and overheating through an increase in the import volume of capital and consumer goods, energy and non-energy imports.

On the external front, exports grew remarkably on account of policy supports provided including regionally competitive energy tariff rates. The Export Facilitation Scheme 2021, the enhancement in the coverage and loan limits, a change in the Foreign Exchange regulations to facilitate exports, launching an e-Tijarat portal and tariff also rationalised in various sectors of the economy in line with the objectives of the National Tariff Policy 2019-2024 among other measures. Moreover, at the international level, the World Trade Organisation (WTO) had also undertaken a trade policy review for Pakistan to ensure transparency and a better understanding of trade policies and practices being followed and pursued in the country.

However, a surge in the global commodity prices was exerting pressure on the imports by significantly pushing import payments. Resultantly, the sizable trade deficit of US $ 32. 9 billion during July-April FY 2022 was partially financed by significant workers’ remittances.

The Consumer Price Index (CPI) inflation for the period July -May 2022 was recorded at 11. 3 percent as against 8. 8 per cent during the same period last year. The pressures on headline inflation in the country could fairly be attributed to adjustments in the prices of electricity and gas, a significant increase in non-perishable food prices, exchange rate depreciation along with a rapid increase in the fuel and commodity prices globally.