The country has succeeded in entering a sustainable economic process phase after attaining stability and can keep moving forward to realize a high rate of growth , said depository financial institution of Pakistan Governor Dr Reza Baqir on Wednesday.
Despite a negative real rate of interest , the financial institution has kept its policy rate unchanged at seven per cent to permit the economy to grow, Dr Baqir said while addressing a conference on Sustainable Growth and Promoting Digitisation. The moot was attended by the representatives of businessmen and office-bearers of the Federation of Pakistan Chambers of Commerce and Industry (FPCCI).
The country has successfully completed the transitional period, but we might not choose a boom and burst strategy because it happened within the past; neither very high economic process nor very low rate of growth is suitable , Mr Baqir asserted.
He said tons of mention sudden appearance of accounting deficit in June goes on, but the important situation is that June usually see higher payments. Also, the imports are rising since the economy is on the high growth path.
He said there should be concerns on three directions if the present account deficit (CAD) is rising. First, the rate of exchange should answer the CAD and if it doesn’t it means the rate of exchange has been artificially managed which may be a negative symptom for the economy.
He said the CAD size also matters. The country expects the CAD to be within the range of two to 3pc of GDP within the current financial year , which isn’t much higher as compared to 6pc in 2018 when it widened to $19bn.
Lastly, he said, if the exchange reserves decrease with the increasing CAD, it’s the explanation for concern. just in case of Pakistan, the exchange reserves are increasing.