ISLAMABAD: Federal minister on Tuesday said the government's ability to control the COVID-19 pandemic "early" was paying dividends as it has benefited the country's economy in terms of growth in the large-scale manufacturing sector.
Minister for Planning, Development, Reforms and Special Initiatives Asad Umar termed the gain as a "dividend of controlling covid early", which paid off Pakistan "on the economic side also, as V shaped recovery gets confirmed".
"Large scale manufacturing numbers for July show more than 9% growth over June and more than 5% growth vs July 2019," Umar said in a Twitter post.
In a parallel development, the Asian Development Bank — which, in June, had approved a $500-million loan to Pakistan as part of the CARES Programme — said in a report released Tuesday the country could see 2021 economic recovery if COVID-19 subsided and structural reforms resumed.
Pakistan's 'notable success'
Noting that Pakistan is "projected to experience a broad economic recovery in fiscal year (FY) 2021", the bank said it has "revised the 2020 growth forecast for Pakistan to -0.4% and the growth forecast for 2021 to 2.0%".
The ADB's Asian Development Outlook (ADO) Update underlined that although inflation shot up from 6.8% in FY19 to 10.7% in FY20, it was not projected to slow down to 7.5% in FY21.
"The current account deficit eased considerably as merchandise imports fell steeply due to containment disruptions, lower oil prices, and local currency depreciation," it said. "As inflationary pressures eased, the State Bank of Pakistan cut its policy rate by a cumulative 625 basis points from March to June 2020 to 7.0% and introduced additional measures to support the economic recovery."
In related comments, ADB Country Director Xiaohong Yang underscored Pakistan's "notable success in containing the dual health and economic challenge presented by COVID-19".
Current account deficit to remain 'unchanged'
Xiaohong mentioned the Pakistani economy's "signs of resilience and recovery", saying what helped shield the poor and most vulnerable during the pandemic was the PTI-led government’s rapid mobilization on August 24 of Rs1.2-trillion relief package, comprising emergency financial support to daily wage earners, cash transfers to low-income families, accelerated procurement of wheat, support for health and food supplies, and financial support for small and medium enterprises.
While the country's industry contracted 2.6% in FY20, the current account deficit is anticipated to remain "unchanged from the ADO 2020 forecast" in FY21.