Pakistan Prosperity Index: March 2021

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PRIME’s latest Prosperity Index reveals an encouraging picture of Pakistan’s economic rebound. The new year began with Pakistan Prosperity Index (PPI) standing at the highest mark, 126.1 (January 2021). A special feature of this edition is simultaneous improvement in purchasing power, credit to private sector and growth in large-scale manufacturing.

The financial and business uncertainties of 2020 have been carried forward in 2021 across the globe. However, Pakistan’s economy appears to be struggling less relative to its regional counterparts with key economic indicators on the rise. The report establishes the increase in prosperity as a result of the improvement in three out of four indicators aggregated to calculate PPI namely, purchasing power, private sector credit and growth of large-scale manufacturing.

Purchasing power saw a modest increase as Y-o-Y inflation further eased in January 2021 hovering at 5.7%. This decelerating inflationary pressure has been characterized by a fall in the prices of basic food items. Large-scale manufacturing had consistently been on the rise since August 2020 growing by 9.13% Y-o-Y in January 2021. The recently approved electricity support package for industries and an extension in tax amnesty scheme besides the restoration of business confidence have largely been sustaining LSM’s recent growth.

Private sector borrowing also maintained its growth momentum standing at an all-time high of Rs. 249.9 billion in January 2021, largely driven by subsidized borrowing rates, restored business and investment confidence. In terms of trade, muted global demand had a ripple effect on country’s trade volume, which after increasing for two successive months last year, dipped to Rs. 1.12 trillion in January 2021.

Despite the 3rd peak, the relaxed Covid-19 restrictions have played an imperative role in keeping the economic wheels moving. The country cannot afford to go under another stringent lockdown. Therefore, the best case scenario would be to pursue a mass vaccination drive in order to sustain the gains made in industrial and financial sector. To read more, download the file attached below:

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Policy Research Institute of Market Economy

آزاد معیشت – خوشحال پاکستان