Year 2021 – Resilient Now Never!


The boom-bust life cycle in Pakistan seems cyclical than sustainable in the past. This is reflected in the past global commodity, political or economic shocks of 1998, 2009 and 2018 where the economy collapsed in a very short period of time.

Unlike in the past, the Pakistani government of Tehreek-e-Insaf (PTI) has succeeded in bringing sustainability to the macroeconomy.

Despite the most devastating health and economic shocks of the century, namely COVID-19 and the recent shock of high commodity prices over several decades, the Pakistani economy has demonstrated the greatest resilience, unprecedented in the past. 74 years of Pakistani history.

Pakistan’s macroeconomic performance has been widely accepted by all international macroeconomic financial institutions (including IMF, World Bank, AfDB, Moody’s, S&P and Fitch, etc.)

The government’s response to the COVID-19 pandemic has been widely hailed and recognized.

Pakistan has been ranked number 1 in the “economists” global normality index, according to The Economist, as the country lifted most of its COVID-19 restrictions imposed to curb the spread of the virus.

The Economist Normality Index offers evidence of how people react to restrictions in real time. Pakistan is followed by Nigeria, Britain and Germany on the list which was updated on November 5, 2021.

Pakistan has deployed the largest social safety net in Pakistani history.

According to the World Bank report “Global Social Protection Responses to COVID-19” (May-2021), Pakistan ranks 4th in the world in terms of number of people covered and 3rd in the world in terms of percentage of population covered among those that covered more than 100 million people. The World Bank said only a few countries have reached impressive six-figure levels in this regard. The Ehsaas Emergency Cash from Pakistan is one of them.

Response to COVID:

It is important to note that Pakistan’s response to the COVID-19 pandemic is more effective and timely than the rest of the world despite budget constraints. Prime Minister Imran Khan’s vision of implementing smart lockdown is the most appropriate one that has allowed the economy to grow.

Following the initiatives provided by the PTI government and the State Bank of Pakistan (SBP) for the relief of the masses.

  • A tax relief plan of Rs 1.240 billion to provide relief to neutralize the socio-economic impact of COVID-19.
  • Globally Rs 2,073 billion in relief from the SBP.
  • Introduction of the financing facility underway for hospitals and new industrial investments (TERF).
  • Introduction of the Rozgar Scheme to prevent layoffs by funding the wages and salaries of employees.
  • Provided relief for restructuring loans to borrowers.
  • The SBP cut the key rate by 625bp.
  • Concessions on electricity bill Rs 46 billion and to SMEs Rs 50.6 billion.
  • Reduction of winter rates @ 11.97 / KWh & @ 12.96 / KWh in 2020 & 2021.
  • Help for 8 million families under the Ehsas program against 3.7 million before the PTI government.
  • Total release of funds of Rs 232 under the Ehsas program in 2021 against Rs 102 billion in 2014.
  • 106 billion under Mera Pakistan MeraGhar, loans for low cost housing programs have been approved by banks.


It is important to note that the economy has exceeded expectations; GDP growth remained at 4%, tax collection exceeded targets, reserves improved and the current account was at its lowest since 2011.

The key to note is that this growth was achieved as the rest of the world faced a massive contraction in production. India (-8%), United Kingdom (-10%), United States (-3.7%), Iran (-6.5%)

While Pakistan’s growth was widespread. Against the target of 2.1%, growth stood at 3.94%. The growth of agriculture was registered at 2.77%, industry at 3.57% and services at 4.43%.

It is relevant to note that record harvests were recorded in 2021 and that the trend is also expected to continue next year. Rice reached 8.4 million tonnes (7.4 million tonnes last year), maize 8.5 million tonnes (7.9 million tonnes last year), wheat 27.5 million tonnes (25.2 million tonnes last year) and cotton 7.1 million bales (9.1 million bales last year).

By 2022, sugar cane is expected to reach 87.7 million tonnes, wheat 28.9 million tonnes and rice 8.8 million tonnes.

Business sector:

Interest rates remained lower for most of the year at 7%, which gave a boost to the private sector.

The aggregate after-tax profit of 100 KSE in the third quarter of 2021 is 258 billion rupees. Highest in the last 10 years.

Growth is widespread, the corporate sector posted a record profitability of Rs 929 billion in FY21, compared to Rs 587 billion in 2018.

Overall, a 247% growth in business formation (69,380 businesses reported from July 2018 to December 21, compared to 19,996 businesses in the last three years of the Pakistan Muslim League government (PML-N )). 44% of the total of 157,000 registered companies in Pakistan were formed within 3 years of the PTI.

In terms of sector, the growth of real estate (494%), the IT sector (194%), and tourism (136%), was observed from 2018 to 21.

The record number of 19 IPOs worth Rs 85 billion has been executed in the past three years.

External sector:

Remittances and exports are above the pre-COVID level of 2019-2020. This, in turn, the current account deficit posted a 10-year low to US $ 1.9 billion in FY21.

Merchandise exports amounted to US $ 25.6 billion, up 14% in FY21.

For the first time in the past 10 years, export indicators look promising and average monthly exports now target US $ 3 billion versus US $ 2 billion as in PML-N time

Another area where significant improvements have been observed is service exports. Services exports in FY21 also increased by 10% to reach US $ 5.9 billion

Exports of the computer sector have doubled since the PML-N period and are expected to reach 3.5 to 4 billion US dollars, up 300% by the end of this government’s mandate.

While remittances accumulated to a record high of US $ 29.4 billion, from US $ 23.1 billion a year earlier.

The other feature of the PTI government during its three years has been the contraction of unnecessary imports and import substitution. However, the recent commodity price shock has pushed up imports.

According to our analysis, 80-85% of the import surge is due to the price effect and 15-20% is quantitative in line with economic growth.

Recent policy measures are already bearing fruit and import growth is expected to slow.

In addition, given the outlook for a better than expected agricultural harvest, food imports will be reduced.


Federal taxes grew at a record high in FY21 and amounted to nearly one trillion rupees above the 2018 level of 4.764 billion rupees.

Likewise, the growth of non-tax revenues has increased massively to reach Rs 1,630 billion.

Overall, the deficit situation improved to 7.1% of GDP from 8.1% in FY20.

The primary balance is also contained at 1.4% against 1.8% of GDP a year earlier.

This year the fiscal situation is even better than last year and Pakistan is expected to post a tax target of Rs 6 trillion and over Rs 1,200 billion in a single year.

So far, thanks to excellent tax collection, the primary balance has shown a surplus of Rs 206 billion during the first four months of the current 2021-22 fiscal year.


After the FY22 budget, global commodity prices reached unprecedented levels, triggering pressure on currencies and pushing inflation up around the world.

  • According to the Food and Agriculture Organization (FAO); world food prices soared 27%, a 10-year high.
  • The CRB index climbed 37.67% year-on-year.
  • The Bloomberg Commodity Index rose 28.4% in one year.
  • The United States’ CPI rose 6.8% in November, the fastest pace since 1982.
  • German inflation at 5.2% in November, the highest rate since June 1992.
  • UK 10-year high inflation rate at 5.1%
  • Factory inflation in China hits 26-year high at 12.9%
  • India WPI hits record 14.23%

The CPI in Pakistan collapsed to 11.5% in November 2021 while it is interesting to note that recently the price of food has seen a significant drop. Onions down 25% year on year, Pulse Moong 25%, Tomatoes 17%, Eggs 10%, Chicken 10% and Potatoes 8%. While the prices of wheat flour, rice and sugar represented stability of the Ehsaas program:

Under the Ehsaas Emergency Cash Program, the government disbursed 179.3 billion rupees to 14.8 million beneficiaries to provide immediate cash assistance of 12,000 rupees whose livelihoods have been severely affected by the pandemic.

Other progress:

The government has cleared the outstanding amount of the electricity sector to the tune of more than Rs 220 billion and repayments of more than Rs 250 billion.

The power supply remained uninterrupted, resulting in double-digit export and industrial production growth.

After a very long period, the rural economy strengthened with record growth in crop yields and prices.

The country is also witnessing the construction boom led by the construction package announced by Prime Minister Imran Khan.

More than Rs 1,000 billion projects have been approved in one year.

Dam construction has started, which will double water storage from the current 13 million acre-feet and the addition of 10,000 megawatts of electricity.

The country has achieved good results overall on the health front, over 150 billion vaccines have been administered. Almost US $ 2 billion was spent on vaccines without provincial contribution.

The largest number of social and economic programs launched, for example Kamyab Pakistan, Sehat card, Ehsas Rashan, Kamyab Jawan, Mera Pakistan Mera Ghar, Kissan card, etc.

The introduction of winter relief tariffs for industries, businesses and households.

Introduction of policies on textiles, automobiles and SMEs.

Emphasis on unconventional products and market exports for diversification, especially IT sector-related incentives

Implementation of the FATF’s toughest action plan in a limited time

Better administrative controls and productivity growth have lowered the prices of essential food items, for example wheat flour, sugar, onion, potatoes, tomatoes and pulses


Going forward, we expect growth to remain at 5%, exports at US $ 31 billion, remittances at US $ 32 billion, taxes at Rs 6 trillion and the trade deficit. to be reduced in the second half of the year 22.

Recent pressures on the current account are due to the commodity shock, but the risks are receding with the right policy measures.

Source: Ministry of Finance

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