SBP expresses concern over rising food inflation in Pakistan

KARACHI: The State Bank of Pakistan (SBP) said on Monday that the policy mix seems to be sufficient to address macroeconomic imbalances and push the economy towards stability in Pakistan.

The State Bank also expected that Pakistan is likely to miss the 4 percent real GDP growth target for this fiscal year (FY20) primarily due to restrained agricultural and manufacturing sector performance.

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As per the SBP reports, In the first quarter (July-September) fiscal year 2020, following the nominal GDP growth of 3.3 percent last year, the government set a 4.0 percent growth target for FY20.

This recovery was based on improved performance by the agricultural and industrial sectors, but based on the slow start during the first quarter, it appears that achieving the annual goals for agriculture and industry can be challenging.

The SBP said export growth and foreign exchange reserves, economic reporting for the necessary revenue and increased food inflation are still major challenges for the economy of the country.

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In addition, a market-based exchange rate system was implemented, which was regulated reasonably well by the interbank foreign exchange market. The government, in particular, resisted deficit monetization, including the roll-over of SBP debt, and actively pursued measures to record it.