ISLAMABAD: painting an uncertain economic outlook, the ministry of Finance on Thursday warned that the prevailing political unrest was causing problems and amplification market uncertainty already caused low foreign exchange reserves and external pressure.
«Inflation risks and external sector risks building macroeconomic imbalances in in economy. In addition, ongoing political unrest is adding to economic uncertainty, which is causing the depreciation of the rupee and affecting on in cost of production. All of these factors make the economic outlook uncertain,” the Economic Advisor (EAW) said in a statement. of Ministry of Finance in Monthly economic bulletin and forecast for July.
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He said he’s tall international prices continued to have a negative impact on external positions, even start of 23 FG. Was intense need for successful completion of 7th and 8th IMF reviews of Pakistan Extended Financing Facility (EFF). government took on all the hardships decisions make reviews successful by reaching agreement at the staff level for tranche of the loan in the amount of $1.17 billion, the report said.
However, the ongoing political unrest is not only creating control problems but on on the other hand, amplifying the uncertainty portrayed by the exchange rate depreciation, which will in turn, act on cost of production. Termination of investment decisions clouding the prospects even more.
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update said year-on-year inflation remained in double figures from November 2021 and will continue in July and hover around the observed level in June due to increase in international commodity prices, especially of energy and depreciation of rupee. CPI inflation was fixed at 21.3%. in June like against 9.7 pcs. in the same month last year.
Splash in June in import of product due to increase in international commodity prices increased trade deficit. Workers’ money was not enough to finance trade deficit, how result, current account deficit (CAD) widened to $17.4 billion. last fiscal year. However, it is expected that with in governments policy measures, imports will fall, and the better performance of export of goods and services and workers’ remittances will bring CAD to a manageable level in coming months.
EAW said not only international commodity prices, especially oil and food, but depreciation of exchange rate affected domestic inflation. He acknowledged that inflation is mainly in in last it was two months also as a result of disruptions in supply, the consequences of which eclipsed government efforts in maintaining prices.
higher interest rate followed by a contraction in the money supply also negatively affects perception. of economic perspective. recent cut in oil prices as a result in a decline in weekly SPI. But market expectation and offer side Factors contributing to inflation.
Published in Dawn, July 29, 2022
