Economic Review 2019.

Byline: Arooj Asghar

Pakistan's economy in 2019 faced many challenges like trade, current account and budget deficits, increase in electricity and gas prices, high inflation and political situation of the country. Trade deficit is continuously increasing; government is trying to control this as well by taking various measures.

In 2019, government took various steps in improving the economy. Government is trying to control its expenditures, Pak rupee is stable now after massive depreciation, stock market is improving as well, foreign exchange reserves of the state bank are increasing, the World Bank has included Pakistan in top 10 countries of the world where serious steps have been taken for ease of doing business, tax collection of FBR has increased by 15-16 percent, documentation of economy is being done, federal contribution to the provincial governments has also increased, and new measures are being taken to improve the business environment.

Pakistan stock exchange is recovering from a low of 28,670 points in August 2019 and has crossed the level of 42,000 in December. Mutual funds and foreign investors are now putting funds in the market due to better market performance. Foreign direct investment has also increased by 200 percent in last four months as compared to last year.

There is an increase in exports in 2019, this increase in exports and cut in imports would improve the trade balance position and ultimately the current account deficit (CAD) that has recently turned into surplus. Economists believe that with the increase in the surpluses in CAD, the country's foreign exchange reserves will also get improved. It is worth mentioning that for the first time in the last four years, the country's current account turned into surplus and was recorded at net positive current account balance of USD 99 million in October 2019. Pakistan's current account deficit in FY19 stood at USD 12.75 billion, a 36 percent reduction from USD 19.9 billion in FY18.

Second phase of China-Pakistan Free Trade Agreement (CPFTA) has also come into the effect from December 2019. This will help exporting additional 313 new Pakistani products at zero duty to the Chinese market. Currently there are over 724 items, which Pakistan exports to China under zero percent duty regime and after the second phase, additional 300 items will also be added in the list of zero percent duty. It is being said that it will help the textile, leather, agriculture products...