Economic indicators examined

A meeting of the Economic Co-ordination Committee (ECC) of the Cabinet has approved a one month”s salary of Rs 380 million for the employees of Pakistan Steel Mills (PSM). The meeting presided over by Finance Minister Ishaq Dar. Privatisation Commission submitted a summary for payment of salary to the employees of PSM for the month of November 2016.

The ECC meeting was given a briefing by Secretary Finance Tariq Bajwa on the economic indicators and was informed that the remittances have declined to US $10.946 billion during July-January 2016-17 from US $11.155 billion for the same period a year before, reflecting a decline of 1.9 per cent. However, on year-on-year basis in January, it improved by 1.5 per cent over the same month of the last year.

The Consumer Price Index (CPI), Wholesale Price Index (WPI) and Sensitive Price Index (SPI) for the month of February 2017 increased to 4.2 per cent, 5.3 per cent and 1.1 per cent respectively on account of increase in food inflation by 3.7 %, non-food 4.6%, and core 5.3%.

Stock of wheat as on February 28, 2017 was recorded 5.52 million tons, showing a sufficient quantity of local wheat for releases to mills by provincial food departments and PASSCO. The total reported stock of sugar in the country as on February 22, 2017 stood at 3.20 million tons. The stock of various POL products averaged 30 days on March 01, 2017.

The committee was informed that Large Scale Manufacturing (LSM) is continuously moving upward as in November and December the growth remained 7% over last year”s. The sectors showing positive growth are iron and steel products which increased by 15.63 %; electronics, 14.35%; non-metallic mineral products, 9.31%; pharmaceuticals, 7.90%; food beverages & tobacco, 6.95%; automobiles, 6.67%; paper & board, 5.69%; fertilisers, 3.47%; rubber products 0.45% and textile, 0.14%.

The committee was informed that outlook of industrial sector is positive and encouraging as the credit to private sector saw an expansion of more than 22%. The industrial sector is improving due to persistent growth in electricity generation and gas production as electricity generation in January 2014-15 was 8,292 MW which increased to 9,210 MW in January 2015-16 and 9,352 MW in January 2016-17.

Gas production also increased above 4,000 MMCFD in December 2016 as compared to 2015 and 2014 which was 3627 MMCFD and 3780 MMCFD respectively. The committee observed a decline in wood products, leather products, engineering products, chemicals and coke & petroleum products.

The committee noted that a negative growth in exports sector is bottoming out in January 2017 as it registered a growth of 4.6% over last year”s. However, on average it declined by 1.13% whereas imports on average increased by 9.2% and on year-on-year basis increased by 28% in January 2017.

On a positive note, most of the imports are coming in machinery group showing productivity. The import of the machinery was registered at 42%, of which power generating machinery, 38%, textile, 117%, construction and mining, 101%, etc. The Federal Board of Revenue (FBR) tax collections year-on-year has improved by 9% in January; and on average during July-January 2016-17, the tax collection improved by 7.6%.

The committee also noted an increasing trend in foreign direct investment, observing that it improved by almost 10% during July-January of the current year over last year. The major recipient sectors were food, power, electricity, and construction. The committee, however, showed concern over the widening of current account deficit and the chair urged to increase exports of goods and services to bridge the gap.