SBP calls for deep-rooted structural reforms to ensure economic stability.

KARACHI -- While Pakistan's economy moved along the stabilization phase led by demand management policies, vulnerabilities in the external and fiscal sectors persisted during Jul-Mar FY19, according to the State Bank of Pakistan's 'Third Quarterly Report on the State of Pakistan's Economy'. 'This implies that the current stabilization agenda needs to be reinforced with deep-rooted structural reforms,' the report maintained. The central bank revealed that the pace of economic growth slowed down considerably during FY19, mainly in response to policy measures taken to curb the twin deficits. These measures affected the performance of the industrial sector and dampened manufacturing activities in the country, it added. 'Meanwhile, water- and weather-related concerns, in tandem with the higher cost of major inputs, took a toll on crop production.

The weak showing by the commodity-producing sectors also constrained the output of the services sector. 'Moreover, the fiscal deficit deteriorated further, as a steep fall in non-tax revenues and a slowdown in tax revenue led the overall revenue collection to stagnate at last year's level. On the other hand, expenditure increased sharply during Jul-Mar FY19, specifically the current expenditure that more than offset the decline in the development expenditure.' According to the report, inflation stubbornly kept an upward trajectory. 'Despite several rounds of policy rate hike since January 2018, the average CPI inflation during Jul-Mar FY19 exceeded the full-year...