Year 2021- Resilient Now ever!


Pakistan boom-bust life cycle appears cyclical than sustainable in past. This is reflected from the past global commodity, political or economic shocks of 1998, 2009, & 2018 where the economy got busted in a very short interval of time.

Unlike the past, the Pakistan Tehreek-e-Insaf (PTI) government has managed to bring sustainability to macroeconomics.

Despite the most devastating health and Economic Shocks of the century i.e COVID-19 and the recent multi-decade high-price commodity shock, Pakistan’s economy has displayed the greatest resilience which is unprecedently in the 74-year history of Pakistan.


Pakistan’s macroeconomic performance was widely accepted by all international macro-economic Financial Institutions (Including IMF, World Bank, ADB, Moody’s, S&P and Fitch, etc.)

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

According to The Economist, Pakistan has been ranked number 1 in the ‘Economists’ world normalcy index as the Country has lifted most of its COVID-19 restrictions imposed to curb the virus spread.


The Economist normalcy index offers some evidence about how people are responding to restrictions in real-time. Pakistan is followed by Nigeria, Britain & Germany on the list which was updated on November 5, 2021.

Pakistan has rolled out the largest social safety net in Pakistan’s history.

According to the World Bank report “Global Social Protection Responses to COVID-19” (May-2021), Pakistan ranks 4th globally in terms of the number of people covered and 3rd globally in terms of the percentage of population covered amongst those that covered over 100 million people. The World Bank has stated that only a few Countries have attained impressive six-digit levels in this regard. Pakistan’s Ehsaas Emergency Cash is one of them.

Response to COVID:

It is important to note that, Pakistan’s response to the COVID-19 pandemic is most effective and timely than the rest of the world despite the fiscal constraints. The Vision of Prime Minister Imran Khan of implementing the smart lockdown is the most appropriate which allowed the economy to grow.

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

  • A fiscal relief package of Rs 1,240 billion to provide relief to neutralize the socio-economic impact of COVID-19.
  • Overall Rs 2,073 billion relief package by the SBP.
  • Introduced Running Finance Facility for Hospitals and new Industrial Investments (TERF).
  • Introduced Rozgar Scheme to prevent layoffs by financing wages and salaries of employees.
  • Provided relief for loan restructuring to borrowers.
  • The SBP reduced the policy rate by 625bps.
  • Electricity bill concessions Rs 46 billion and to SMEs Rs 50.6 billion.
  • Reduction in winter tariffs @11.97/KWh & @12.96/KWh in 2020 & 2021.
  • Relief to 8 million families under Ehsas program from 3.7 million before the PTI government.
  • Total release of Rs 232 funds under Ehsas program in 2021 from Rs 102 billion in 2014.
  • 106 billion under Mera Pakistan MeraGhar, low-cost housing scheme loans have been approved by banks.


Importantly, the economy performed above expectations; the GDP growth remained 4%, the tax collection exceeded above targets, reserves improved, and the current account was reported lowest since 2011.

The key to note is that this growth was achieved when the rest of the world was encountering massive output contraction. India (-8%), UK (-10%), USA (-3.7%), Iran (-6.5%)

While Pakistan’s growth was broad-based. Against the 2.1% target, the growth came in at 3.94%. The agriculture growth was recorded at 2.77%, industry 3.57%, and services at 4.43%.

It is pertinent to note that record bumper crops were witnessed in 2021 and the trend is likely to continue next year as well. Rice came in at 8.4 million tons (last year 7.4mn tons), Maize 8.5 million tons (last year 7.9 million tons), wheat 27.5 million tons (last year 25.2 million tons), and cotton 7.1 million bales (last year 9.1 million bales).

In 2022, sugarcane is expected at 87.7 million tons, wheat 28.9 million tons, and rice 8.8 million tons.

Corporate Sector:

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

The aggregate profit after tax of KSE-100 in 3Q of 2021 is reported at Rs 258 billion. The Highest in the last 10 years.

The growth is broad-based, the corporate sector has posted record profitability of Rs 929 billion in FY21, up from Rs 587 billion in 2018.

Overall, 247% growth in companies’ incorporation (69,380 companies from July-2018 to December 21 reported, compared to 19,996 companies in the last three years of the Pakistan Muslim League (PML-N) government). 44% of the total 157,000 companies registered in Pakistan incorporated in the PTI’s 3 years.

Sector wise, Real Estate (494%), IT Sector (194%), & Tourism (136%) growth witnessed from 2018 to 21.

The record number of 19 IPO’s worth Rs 85 billion was executed in the last three years.

External Sector:

Remittances and exports are above than pre-COVID level of 2019-20. This, in turn, the current account deficit posted 10 years low of US$ 1.9 billion in FY21.

Exports of Goods came in at US$ 25.6 billion, up 14% higher in FY21.

First time in the last 10 years, exports indicators are looking promising and the average monthly exports now targeting US$ 3 billion from US$ 2 billion as in PML-N time

Exports of services is another area where significant improvements have been witnessed. Services exports in FY21 also increased by 10% to US$ 5.9 billion

IT sector exports have doubled from PML-N time and are expected to reach US$ 3.5 billion to US$ 4 billion, up 300% by the end of this government’s term.

While remittances have piled up to a record level of US$ 29.4 billion, from US$ 23.1 billion a year earlier.

The other hallmark of the PTI government in its three years was the contraction of unnecessary imports and imports substitution. However, the recent commodity price shock has jacked up the imports.

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

The recent policy actions are already fetching results and import growth is expected to slow down.

Moreover, given the better-than-expected agriculture crop outlook, the food import will be curtailed.


The federal taxes registered a record growth in FY21 and came almost Rs one trillion more than the 2018 level at Rupee 4,764 billion.

Similarly, the growth in non-tax revenue has witnessed a massive increase to Rs 1,630 billion.

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

The primary balance is also contained to 1.4% from 1.8% of GDP a year earlier.

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

So far due to excellent tax collection, the primary balance has reported a surplus of Rs 206 billion in the first four-month of the current Fiscal Year 2021-22.


Following the budget FY22, global commodity prices surged to unprecedented levels, triggering pressure on currencies and pushing higher inflation around the world.

  • As per the Food and Agriculture Organisation (FAO); world food prices climbed 27%, a 10-year peak.
  • CRB Index climbed 37.67% year-over-year.
  • Bloomberg Commodity Index increased 28.4% in a year.
  • USA CPI climbed by 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 witnessed at 5.1%
  • China factory inflation is at 26 years high at 12.9%
  • India WPI hits record high at 14.23%

The CPI in Pakistan cloaked in at 11.5% in November 2021 while it is interesting to note that recently the price of food is witnessing a significant decline. Onions down 25% YoY, Pulse Moong 25%, Tomatoes 17%, Eggs 10%, Chicken 10% and Potatoes 8%. While the prices of Wheat flour, rice, and sugar depicted a stability Ehsaas Program:

Under Ehsaas Emergency Cash Program, the government has disbursed Rs 179.3 billion to 14.8 million beneficiaries to provide immediate cash relief of Rs 12,000 whose livelihood has been severely affected by the pandemic.

Other progress:

The government has cleared the outstanding power sector dues to the tune of more than Rs 220 billion and refunds of more than Rs 250 billion.

The power supply remained uninterrupted, resultantly exports and industrial output growth remained in double-digit.

After a very long-time, the rural economy has 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 worth projects were approved in one year.

The construction of Dams initiated which will double the water storage from the current 13 million acre-feet and the addition of 10,000 megawatts of electricity.

The Country has scored overall well on the health front, more than 150 billion vaccines have been administered. Close to US$ 2 billion was spent on vaccines without provincial contribution.

The highest number of social and economic programs launched e.g. Kamyab Pakistan, Sehat card, Ehsas Rashan, Kamyab Jawan, Mera Pakistan Mera Ghar, Kissan card, etc.

The introduction of winter relief tariffs to industries, commercial, and households.

Introduced the Textile, Auto, and SME Policies.

The focus on non-conventional products and market exports for diversification especially on IT sector related incentives

Implemented the toughest FATF action plan in a limited period

Better administrative controls and productivity growth brought prices of essential food items down e.g. Wheat flour, Sugar, onion, potatoes, tomatoes, and pulses


Going forward, we expect the growth to stay at 5%, exports US$ 31 billion, remittances US$ 32 billion, taxes Rs 6,000 billion, trade deficit to reduce in the 2nd half of FY22.

Recent pressures on the current account are due to commodity shock but risks are receding due to timely policy actions.

Source: Ministry of Finance


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