It seems like lockdown and business distress conditions triggered by COVID-19 pandemic are over, as August-2020 brought the good news of ending lockdown making 90 percent of the businesses to be operated as normal.
We don’t need an economic expert to indicate that the last financial year ending on June 30th, 2020 and especially the last two quarters were the worst for country’s economy and business conditions. The negative growth is obvious to everyone, but numbers and statistics and their comparison is something that gives a realistic idea about how bad things are and how soon recovery is possible.
Pakistan doesn’t publish its economic figures on quarterly basis like other countries rather Ministry of Finance (MOI) publishes its outlook and economic update on monthly basis. The monthly outlook report by MOI actually discusses the Monthly Economic Indicator (MEI) which comprises of data from three variables. These 03 variables include year on year change of large scale manufacturing (LSI), inflation adjusted money supply (M2) and weighted average composite leading indicator (CLI) in main trading areas.
As per the latest economic outlook of July-2020 from Ministry of Finance’s average MEI stood at negative 0.38 for the financial year 2020. If we breakdown the quarterly data for the respective year, MEI stood positive at 0.97 and 2.58 for the 1st and 2nd quarter respectively. Whereas, for the 3rd quarter & 4th quarter came in negative by 0.19 and 4.90 respectively due to COVID-19 pandemic.
Highest value of MEI at 5.34 was recorded in the month of December 2019 while lowest one came in April 2020 at -9.48. This is to be noted the average growth of -0.38 by MEI also matches with provisional Gross Domestic Product growth as forecasted by Pakistan Bureau of Statistics.
Ministry of Finance expects for the positive growth in July and August-2020 as per MEI which still has to be announced. Data of some variables for MEI calculation are still to be published. Moreover MOI also foresees improved exports and workers’ remittances due to revival of economic activities after lockdown.
Another statistics that adds to MOI optimism is agriculture sector’s growth rate at 2.8 percent. The respective growth rate will be better than last year due to better growth in crops, livestock, fisheries & forestry.
On one side, where MOI is relying on own statistics and numbers of Pakistan Statistics Bureau, another side of picture is given by IPSOS in its recent survey, where unemployment in Pakistan was most concerning issue for 86 percent of the respondents. The most worrying part of the survey was that only 3 percent of the respondents were expecting better growth rate and thought that the economy is moving in the right direction.
Despite MOI’s confidence in its own statistics with its major measure of MEI, analysts and economic experts still have their fingers crossed for the coming months and next year.