Moody’s sees 1.5% GDP growth

Moody’s Investors Service said the economy should return to modest 1.5 per cent gross domestic product (GDP) growth in financial year 2021, which ends on June 30.

“Pakistan economy will return to growth in fiscal year 2020-21, gaining a modest 1.5 per cent and accelerate to 4.4 per cent in 2022. The government and central bank responses and reforms will partially soften the pandemic’s impact and help revive the economy,” according to the rating agency’s latest report.

It said the measures and initiatives taken by the government and the State Bank of Pakistan (SBP) to support economic and business activities and relief packages for households and industries in the wake of the pandemic put the macro economy back on growth track. Moody’s projected gross domestic product (GDP) growth of 1.5% for FY21, which was lower than the expansion of 1.5-2.5% anticipated by Pakistan’s central bank.

Pakistan’s GDP contracted 0.4% in the previous fiscal year due to a halt to economic activities with the imposition of a lockdown late in March – the end of third quarter of FY20.

Moody’s said economic activity would remain below pre-Covid levels for some time and vulnerable to successive waves of coronavirus infection, “even as confidence has gradually rebounded from low levels.”

Proactive policy responses will support Pakistan’s economy, which has low reliance on exports and limited trade and supply chain linkages. “Longer-term growth remains robust given supply-side enhancements due to increased power generation, improvements in national security and investment in transport and logistics,” it said.