SBP chief upbeat on export-driven growth

KARACHI: Tariq Bajwa, governor State Bank of Pakistan (SBP), on Friday said recovery in exports that started in the second half of FY17 and continued in the current fiscal year bodes well for country’s economy.

"Exports have shown positive growth during the last six months," Bajwa said, while addressing a delegation of Pakistan Business Council (PBC). "In fact, during the last three months, exports have grown by 13.2 percent, which shows that the decline in exports seems to have finally reversed."

The governor said the data of first two months of the current year points to recovery in key external indicators, particularly remittances, exports and FDI. “Workers’ remittances grew by 13.2 percent to $3.5 billion in Jul-Aug 2017 and inflows from all major corridors were higher as compared to Jul-Aug 2016,” he added.

Bajwa continued that the country’s economy was increasingly becoming attractive for investment with continuation of supportive economic policies. “I believe at this juncture, it offers a lot of opportunities for businesses to grow and expand," he said.

He said the pace of expansion in the economy accelerated for the third consecutive year in FY17 amid improving security situation and better energy supply, while it grew by 5.3 percent in FY17, compared to 4.6 percent last year. “The growth was not only the highest during last ten years but also broad-based. All the three major sectors – agriculture, industry, and services – contributed to acceleration in growth.”

The central bank governor pointed out that the accommodative monetary policy has played a key role in boosting private sector credit demand as policy rate has come down from 10 percent in October 2014 to only 5.75 percent.  “Historic low interest rates were instrumental in taking the private credit growth of 16.8 percent in FY17, over and above 11.2 percent a year ago,” he said. 

Bajwa added the overall expansion in private credit stood at Rs747.9 billion during FY17 and remarkably about 40 percent of the expansion in credit was meant for fixed investment. On the supply side, he said, a healthy deposit growth improved the liquidity of the banking system, whereas the latest data shows the trends in private sector are continuing in FY18. “A much lower net retirement in private sector credit of Rs75.5 billion from July 1 to September 1, 2017 compared to a net retirement of Rs224.3 billion in the corresponding period last year indicates that private sector has borrowed more credit during FY18 so far,” Bajwa said adding that this with a robust growth of 40 percent in import of machinery group in 2016-17 augurs well for the future growth.

Earlier, Ehsan Malik, the chief executive officer of PBC spoke on the contribution of members of the council which includes 24 of the largest multinational corporations from 12 foreign countries. “The listed market value of the member companies has reached Rs8.4 trillion and that in addition to contributing to Pakistan’s GDP, exports and taxes significantly, these companies provide 400,000 direct jobs and 2 million indirect jobs,” Malik said adding the PBC was an advocate of “Priority Pakistan” approach.