FPCCI forecasts negative growth in fiscal year 2023

KARACHI: The apex trade body on Friday warned of a negative growth rate in Pakistan in the fiscal year 2023, glaring anomalies in the fiscal discipline and management of external account despite harsh measures taken by the government in past many months.

With millions added to the unemployment pool, independent economists, as per Federation of Pakistan Chambers of Commerce and Industry (FPCCI), projected Pakistan’s growth rate by the end of FY23 ranging from -1.0 percent to -2.5 percent.

“People dealing with ground realities of Pakistan’s economy, i.e. the business, industry, and trade community can see that the economic growth rate of the country will turn into negative by the time FY23 concludes,” FPCCI president Irfan Iqbal Sheikh said.

Based on the data and economic performance of the last 8-9 months (July 2022-March 2023), International Financial Institutions have substantively revised Pakistan’s growth rate projections downwards. The World Bank has revised it to 0.4 percent, International Monetary Fund to 0.5 percent, and Asian Development Bank to 0.6 percent.

FPCCI chief, however, maintained that independent economists were projecting the year-end growth rate to be in negative, with massive unemployment. “This will be the most unfortunate economic scenario for the country in its history and this recessionary cycle will be very hard to break.”

Sheikh was of the view that the country’s exports and export-oriented industries must be protected at all costs. “Otherwise, the entire economy will collapse,” he feared. FPCCI chief demanded that export finance scheme and long-term financing facility of the State Bank of Pakistan should be offered on favorable terms; with maximum interest rate at 10 percent to enable exporters to fulfil their pending export orders feasibly.

“When the growth rate goes into negative in a country like Pakistan with virtually no foreign exchange reserves, exploding population and battered industrial base; and that too in a nosedive pattern within a short period of one year; the entire political, social and economic fabric is torn apart,” he explained.

It’s worth mentioning that foreign exchange reserves held by the State Bank of Pakistan dropped by $170 million to $4.038 billion in the week ending April 7, on debt repayments. The reserves can hardly cover one month's worth of imports.

FPCCI chief also mentioned a national economic agenda by FPCCI for next 15 years, with all political parties on board for continuity in economic, industrial, trade, taxation, monetary, agricultural, IT & ITeS and SME policies.

He also proposed a broadened tax base and simplified taxation system in the upcoming federal budget. “FPCCI is ready to resume the practically dysfunctional consultative process with the government nearly on all levels at the moment," Sheikh offered.