With Covid19 Under Control, Pakistan Enjoys V-Shaped Recovery in Manufacturing

[RiazHaq]

With Covid19 Under Control, Pakistan Enjoys V-Shaped Recovery in Manufacturing

With coronavirus spread contained , Pakistan economy is rebounding with V-shaped economic recovery. Pakistanis have once again defied al...

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With coronavirus spread contained, Pakistan economy is rebounding with a V-shaped economic recovery. Pakistanis have once again defied all foreign and domestic doomsayers, including media, activists and think tanks of all varieties. The nation's monthly Quantum Index of Manufacturing (QIM) for July 2020 has returned to where it was a year ago in July 2019, according to data released by Pakistan Bureau of Statistics. Meanwhile, the number of daily new cases has declined from over 6,000 a day in June to around 500 a day now. The LSMI output increased by 5.02% for July, 2020 compared to July, 2019 and 9.54% in June, 2020. The recovery in manufacturing is quite broad, extending from cement production to fuel sales and growing demand for automobiles to home appliances, according to Bloomberg News. Pakistan has successfully overcome the challenges posed by the pandemic and its economic impact. Khan-Bajwa cooperation has been one of the keys to the country's success in dealing with the twin crises.

Covid19 Cases in Pakistan. Source: Our World in Data

Broad Recovery:

The recovery in manufacturing is quite broad, extending from cement production to fuel sales and growing demand for automobiles to home appliances, according to Bloomberg News. The nation's monthly Quantum Index of Manufacturing (QIM) for July 2020 has returned to where it was a year ago in July 2019, according to data released by Pakistan Bureau of Statistics. Meanwhile, the number of daily new cases has declined from over 6,000 a day in June to around 500 a day now. The LSMI output increased by 5.02% for July, 2020 compared to July, 2019 and 9.54% if compared to June 2020. Month-wise trend of QIM from July, 2018 to July, 2020.

Pakistan Monthly Quantum Index of Manufacturing. Source: PBS

Cement Sales:
Pakistan is seeing the return of construction boom with new incentives under Naya Pakistan Housing Program. Monthly cement sales rose to near all-time high of almost 5 million tons in July 2020 as construction activity picked up in both housing and CPEC-related projects.

Pakistan Cement Sales. Source: Bloomberg

Car Sales:
Gasoline sales in June, 2020 hit new record and local car deliveries rose to about 10,000 units as people returned to work after easing of lockdown in May, 2020. Kia Motors Corp.’s local unit is planning to add a second shift at its factory in Karachi from January.

Pakistan Car Sales Recovery. Source: Bloomberg

Multiple Sectors Growing:
Sectors including food, beverages & tobacco, coke & petroleum products, pharmaceuticals and non metallic mineral products saw an increase in production in July 2020. Muzzammil Aslam, chief executive officer at Tangent Capital Advisors Pvt., was quoted by Bloomberg as saying, “It has surprised everybody". Aslam expects Pakistan economy at 4%-5% in current fiscal year, higher than the government’s 2.1% target. “The growth is led by an aggregate demand push.”
Summary:

Pakistanis have defied all foreign and domestic doomsayers, including media, activists and think tanks of all varieties. Pakistan has successfully fought off the deadly COVID19 virus and begun to bounce back economically. Moody's rating agency has raised Pakistan's economic outlook from "under review for downgrade" to "stable". Pakistan's Planning Minister Asad Umar is talking of a "V-shaped recovery". Monthly cement sales have rebounded to pre-pandemic level, fuel sales have increased, tax collection is up, exports are rising and the Karachi stock market is booming again. Prime Minister Imran Khan and Army Chief General Javed Bajwa have been on the same page in tackling the health and economic crises faced by Pakistan. Contrary to the critics of Pakistan's civil-military ties, Khan-Bajwa cooperation has been one of the keys to the country's success in dealing with the twin crises.
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With Covid19 Under Control, Pakistan Enjoys V-Shaped Recovery in Manufacturing

With coronavirus spread contained , Pakistan economy is rebounding with V-shaped economic recovery. Pakistanis have once again defied al...

www.southasiainvestor.com

 

[Marker]

So Pakistan is coming back to normal. Spikes in consumptions are due to return of normalization after long period of lockdown.

Economic activities will gradually settle to previous averages after some time.

 

[RiazHaq]

In the outgoing FY (2019-20), Pakistani expatriates remitted a record of $23.12 billion with more than 6% year-on-year (YoY) growth compared to $21.74 of FY 2018-19.

The curious case of Pakistan’s spiralling remittances | The Express Tribune

The extraordinary leap can be primarily due to the tightening of informal money markets

tribune.com.pk

The momentum has not only persisted but amplified in on-going FY 21 with a whopping $2.77 billion remittance in July, followed by an inflow of $2.095 billion in August. This unprecedented surge is bemusing, and what has baffled many is the fact that this escalation has occurred during the pandemic. So, what could the potential triggers to this mammoth inflow be?
The extraordinary leap can be primarily due to the tightening of informal money markets, which has augmented the inflow through formal banking channels. In the budget for FY 2020-21, the incumbents allocated Rs25 billion to formalise foreign remittances, which would aid in stockpiling foreign exchange reserves to service colossal national debt obligations.
Pakistanis typically used to carry cash in their luggage physically. But due to flight reduction and sparse international travels, they would have been compelled to access official banking channels for money transfers. Also, remittances might have incremented on account of significant job losses in the Gulf region due to the Covid-related recession. Hence the spiral may demonstrate high one-time repatriation of money back to Pakistan.
On the other hand, the State Bank of Pakistan (SBP) has emphasised an orderly ‘market-based’ exchange rate management and sound policymaking under the Pakistan Remittance Initiative. The SBP sheds the spotlight on the reduction of the threshold for eligible transactions from $200 to $100 under the Reimbursement of Telegraphic Transfer (TT) Charges Scheme. It also stressed on adoption of digital channels and targeted marketing campaigns to promote formal routes. Similarly, IT-related freelance services’ payment limits have increased from $5,000 to $25,000 per individual per month. The SBP believes that it has facilitated to enhance home remittances through formal banking channels in Pakistan.
The crux of the matter is remittances will upslope further in the future due to effectuated compliance of formal banking channels. Still, the recent abnormal increment will ease down in the coming months when the western economies recuperate from the ramifications of the Covid-related slump.

 

[CrazyZ]

Pakistan has to learn from the mistakes of previous balance of payment crisis's. We have recovered in the past as well with the low hanging fruit of remittances, agricultural and textile exports. Now we must invest these inflows and profits into improving competitiveness, expanding manufacturing and service exports, and R&D into more advanced industry and services.

In past cycles, inflows and profits were invested into safer assets (real estate, gold) or abroad, which did little to improve our forward growth. Imports based consumption boosted growth until the forex ran out....then back to IMF. We must break this cycle. Domestic investment and long term planning are key.

 

[RiazHaq]

#Pakistan earns $1.44 billion in #IT #exports, up 20.72% from $1.19 billion from last year. #computer services exports grew 23.44% as it surged to $1,106 million from US $ 895.990 million last year. #technology #economy #trade https://dunyanews.tv/en/Business/56...lion-from-IT-services-export-during-FY2019-20

Pakistan earned US $ 1438.827 million by providing different information technology (IT) services in various countries during July-June (2019-20).

This shows growth of 20.72 percent when compared to US $ 1191.864 million earned through provision of services during the corresponding period of fiscal year 2018-19, Pakistan Bureau of Statistics (PBS) reported.

During the period under review, the computer services grew by 23.44 percent as it surged from US $ 895.990 million last year to US $ 1106.027 million during July-June (2019-20).

Among the computer services, the exports of software consultancy services witnessed increase of 14.98 percent, from US $ 354.397 million to US $ 407.492 million while the export and import of computer software related services also rose by 11.62 percent, from US $ 285.235 million to US $ 318.368 million.

The exports of hardware consultancy services decreased by 16.55 from, US$ 2.345 million to US$ 1.957 million whereas the exports of other computer services rose by 51.91 percent from US$ 247.976 million to US $ 376.699 million. In addition the export of repair and maintenance services however witness decline of 74.97 percent from $6.037 million to $1.511 million.

Meanwhile, the export of information services during the period under review increased by 61.39 percent by going up from US $ 1.580 million to US $ 2.550 million.

Among the information services, the exports of news agency services increased by 100.89 percent, from US $ 0.677 million to US $ 1.360 million whereas the exports of other information services also increased by 31.78 percent, from US $ 0.903 million to US $ 1.190 million.

The export of telecommunication services also witness increase of 12.22 percent as these went up from US $ 294.294 million to 330.250 million during the fiscal year under review, the data revealed.

Among the telecommunication services, the export of call centre services increased by 26.17 percent during the period as its exports increased from US $ 98.858 million to US $ 124.730 million whereas the export of other telecommunication services also increased by 5.16 percent, from US $ 195.436 million to US $205.520 million during the period under review, the PBS data revealed.

It is pertinent to mention here that the services trade deficit of the country during the fiscal year (2019-20) decreased by 42.96 percent as compared to the corresponding period of last year.

During the period from July-June, 2019-20, services exports decreased by 8.66 percent, whereas imports reduced by 24.25 percent, according the data released by Pakistan Bureau of Statistics.

The services worth US $ 5.449 billion exported during the period under review as compared the exports of US $ 5.966 billion in same period of last year, whereas imports of services into the country was recorded at US $ 8.284 billion as against the imports of US $ 10.936 billion, the data revealed.

 

[Rafi]

#Pakistan earns $1.44 billion in #IT #exports, up 20.72% from $1.19 billion from last year. #computer services exports grew 23.44% as it surged to $1,106 million from US $ 895.990 million last year. #technology #economy #trade https://dunyanews.tv/en/Business/56...lion-from-IT-services-export-during-FY2019-20

Pakistan earned US $ 1438.827 million by providing different information technology (IT) services in various countries during July-June (2019-20).

This shows growth of 20.72 percent when compared to US $ 1191.864 million earned through provision of services during the corresponding period of fiscal year 2018-19, Pakistan Bureau of Statistics (PBS) reported.

During the period under review, the computer services grew by 23.44 percent as it surged from US $ 895.990 million last year to US $ 1106.027 million during July-June (2019-20).

Among the computer services, the exports of software consultancy services witnessed increase of 14.98 percent, from US $ 354.397 million to US $ 407.492 million while the export and import of computer software related services also rose by 11.62 percent, from US $ 285.235 million to US $ 318.368 million.

The exports of hardware consultancy services decreased by 16.55 from, US$ 2.345 million to US$ 1.957 million whereas the exports of other computer services rose by 51.91 percent from US$ 247.976 million to US $ 376.699 million. In addition the export of repair and maintenance services however witness decline of 74.97 percent from $6.037 million to $1.511 million.

Meanwhile, the export of information services during the period under review increased by 61.39 percent by going up from US $ 1.580 million to US $ 2.550 million.

Among the information services, the exports of news agency services increased by 100.89 percent, from US $ 0.677 million to US $ 1.360 million whereas the exports of other information services also increased by 31.78 percent, from US $ 0.903 million to US $ 1.190 million.

The export of telecommunication services also witness increase of 12.22 percent as these went up from US $ 294.294 million to 330.250 million during the fiscal year under review, the data revealed.

Among the telecommunication services, the export of call centre services increased by 26.17 percent during the period as its exports increased from US $ 98.858 million to US $ 124.730 million whereas the export of other telecommunication services also increased by 5.16 percent, from US $ 195.436 million to US $205.520 million during the period under review, the PBS data revealed.

It is pertinent to mention here that the services trade deficit of the country during the fiscal year (2019-20) decreased by 42.96 percent as compared to the corresponding period of last year.

During the period from July-June, 2019-20, services exports decreased by 8.66 percent, whereas imports reduced by 24.25 percent, according the data released by Pakistan Bureau of Statistics.

The services worth US $ 5.449 billion exported during the period under review as compared the exports of US $ 5.966 billion in same period of last year, whereas imports of services into the country was recorded at US $ 8.284 billion as against the imports of US $ 10.936 billion, the data revealed.

Thanks for your contribution, it is much appreciated.

 

[RiazHaq]

Fitch has warned of decline in remittances amid the #Coronavirus shock. But #remittances have been robust in #Pakistan and Bangladesh. ADB says 14% of households in #Bangladesh, 8% in #Philippines, 4% in Pakistan and 2% in #India receive remittance income. https://www.fitchratings.com/resear...-to-decline-amid-coronavirus-shock-08-09-2020

Fitch Ratings-Hong Kong-08 September 2020: The coronavirus pandemic and subsequent impact on the oil market are having a considerable effect on migrant workers and are likely to supress remittance flows in the APAC region, Fitch Ratings says in a special report. We expect flows to weaken in the coming quarters, even though recent amounts have been surprisingly robust in some countries due to temporary factors. Declining remittances in economies that are dependent on them may affect sovereign ratings through pressures on external finances and economic growth.

Demand for migrant labour has provided an important and stable source of foreign-currency remittance flows for a number of APAC sovereigns, including Bangladesh (6.0% of GDP), Pakistan (7.9%), Sri Lanka (8.0%) and the Philippines (8.4%). India is the largest recipient of remittances globally but they account for a small share of GDP at 2.9%. Remittance flows have helped keep current account deficits contained by offsetting large trade deficits. Indeed, without remittances the Philippines, Pakistan, Sri Lanka, and Bangladesh would all have large current account deficits of between 7%-10% of GDP.

Remittances in APAC also provide economic benefits to recipient countries. First, they support domestic consumption by providing an additional income source to households. According to the Asian Development Bank, about 14% of households in Bangladesh receive remittance income, 8% in the Philippines, 4% in Pakistan and 2% in India. Second, job opportunities for migrant workers relieve slack in domestic job markets.

Remittance flows in APAC were surprisingly mixed in the second quarter of 2020. Monthly data show a considerable and broad decline in remittances during April and May, as Fitch expected, but a recovery in June and July. The rebound in flows was particularly robust in Pakistan and Bangladesh, where flows broke records in both June and July. Sri Lanka and the Philippines also saw an improvement in remittance flows in June, but much more modest.

Anecdotal evidence points to temporary factors for the increase in recorded remittances in the recent period. These include migrant workers transferring their savings in preparation to return home, the impact of lockdown restrictions on transferring funds and a shift to formal remittance channels, which are picked up in the official data.
Fitch forecasts a 12% decline across the region in the second half of the year as the temporary support factors fade.

The deterioration in remittance inflows is likely to widen current account deficits, contributing to higher external financing needs. For countries with fragile external finances, such as Pakistan and Sri Lanka, the shock to remittances could exacerbate existing challenges. Lower oil prices and subdued import demand, however, are likely to soften the aggregate impact on external balances.

Remittances typically provide a countercyclical buffer for economic activity and vulnerable households. In domestic economic shocks, family members working abroad can increase remittances to help mitigate the impact of sluggish domestic activity. The pandemic, however, represents a much more synchronised global economic shock than previous downturns. This limits the potential support of the remittance channel.

Lower remittance flows could affect public finances through two channels: lower revenue collection from weaker consumption and higher social spending to support remittance-dependent households as well as returning migrant workers. Many countries in the region already have limited fiscal space to address the current coronavirus shock and the decline in remittances could exacerbate current challenges.

 

[RiazHaq]

Remittances to #Pakistan have stayed above the $2 billion mark for 3 months in a row in spite of global #COVID #lockdowns. The key reason is that 600,000 #Pakistanis migrated overseas in 2019 alone, higher than the previous 500,000 average. #diaspora

Nearly 600,000 Pakistanis Migrated Overseas in 2019

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