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SBP projects GDP growth to remain between at 3-4%

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  • SBP says economy will grow at slower pace.
  • Economy had expanded by 6% during last fiscal year. 
  • SBP had already cut the economic growth to about 2%.

KARACHI: The State Bank of Pakistan (SBP) on Wednesday projected that Pakistan’s economy will grow at a slower pace in the ongoing fiscal year compared to what was predicted a few months ago due to the catastrophic flood losses and falling demand, and as high interest rates, reported The News.

“Taking into account the destruction caused by floods and the policy focus on stabilisation, the SBP projects real GDP [Gross Domestic Product] growth below the previously announced range of 3-4% for FY-2023,” said the central bank in its annual report on the State of Pakistan’s Economy for the fiscal year 2021/22.

The economy had expanded by 6% during the last fiscal year. The SBP had already cut the economic growth to about 2% in its monetary policy statement in October.

The SBP’s growth projection was not only based on flood-related fallout on the economy, which is anticipated to affect the real economic activity through a variety of channels and have a considerable negative impact on output.

The country’s economy was given dim predictions by international financial institutions as well. The World Bank predicts that this fiscal year’s GDP growth would be 2.2%. The country’s GDP was projected by the International Monetary Fund to grow by 3.5% without taking the impacts of the floods into account.

The central bank’s economic report card for FY-2022 was released amid a balance of payments crisis. 

Pakistan severely needs external financing while the IMF’s ninth review has been pending since September. The forex reserves have fallen to $6.7 billion, hardly enough for a month’s worth of imports.

On inflation, the central bank has projected that the prices would go beyond the previously announced range of 18-20% during the ongoing fiscal. The consumer price index inflation is expected to be in the 21-23 range, according to its last monetary policy statement.

“Supply shocks in the form of the rollback of energy subsidies and resumption of fuel taxation and losses to agriculture produce caused by floods are likely to influence the inflation trajectory during the year. The elimination of subsidies and increase in fuel taxation triggered a sharp increase in inflation since June 2022, and the trend is likely to persist in FY2023,” it said in the report.

The coordinated fiscal and monetary policy stance is likely to reduce external account pressures in FY2023. 

The SBP sees the current account deficit to be around 3% of GDP. This improvement would be driven by a sizeable contraction in import growth. 

Likewise, global commodity prices have also started to soften after reaching multiyear peaks in FY-2022, which will reduce the pressure caused by a large price impact, it said.

However, the downturn in global demand may also weaken the growth of exports, and the tightening of policies in advanced economies would lessen the likelihood of capital flows to emerging and developing economies.

After seeing a surge in FY-2021, the workers’ remittances seem to have peaked in FY-2022 and are probably going to stay at a similar level in FY-2023, it noted.

“Alongside the IMF programme disbursements, the country is expected to receive external financing from multilateral and bilateral creditors that will considerably strengthen FX reserves position during FY2023.”

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In January 2025, RDA inflows reach 9.564 billion USD.

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Remittances under the Roshan Digital Account (RDA) increased from US $9.342 billion at the end of 2024 to US $9.564 billion by the end of January 2025.

The most recent data issued by the State Bank of Pakistan (SBP) revealed that remittance inflows in January totaled US$222 million, compared to US$203 million in December and US$186 million in November 2024.

Millions of Non-Resident Pakistanis (NRPs), including those who own a Non-Resident Pakistan Origin Card (POC), desire to engage in banking, payment, and investing activities in Pakistan using these accounts, which offer cutting-edge banking options.

Nearly 778,697 accounts were registered under the scheme by the end of January 2025, according to the data.

By the end of January, foreign-born Pakistanis had contributed US $59 million to Roshan Equity Investment, US $479 million to Naya Pakistan Certificates, and US $799 to Naya Pakistan Islamic Certificates.

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FBR lowers Karachi’s built-up structure property valuation rates

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A year-by-year breakdown of the depreciation value of residential and commercial built-up properties is included in the updated property valuation rates for Karachi that the FBR has announced.

The notification said that built-up structural values on residential property will be gradually reduced.

A residential home’s built-up structure, which is five to ten years old, will lose five percent of its worth.

In a similar vein, constructions between the ages of 10 and 15 will lose 7.5% of their value, while those between the ages of 15 and 25 would lose 10%. Built-up structures that are more than 25 years old will be valued similarly to an open plot.

Furthermore, age will also be used to lower the valuation of built-up properties, such as apartments and flats.

Structures that are five to ten years old will depreciate by ten percent, while those that are ten to twenty years old will depreciate by twenty percent. A 30% depreciation will be applied to properties that are 20 to 30 years old, while a 50% reduction will be applied to those that are above 30 years old.

In terms of commercial built-up properties, buildings that are 10 to 15 years old will lose 5% of their value, while those that are 15 to 25 years old will lose 8%. The value of properties that are more than 25 years old will drop by 10%.

In contrast, there would be a 15% boost in the value of commercial properties in the Defence Housing Authority (DHA) that face any Khayaban.

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Remittances Increase 25.2% in January 2025: $3.0 Billion Inflow

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Remittances from Pakistani workers totalled US$3.0 billion in January 2025, representing a 25.2% increase from the previous year.

The cumulative remittances for July through January of FY25 were 20.8 billion dollars, up 31.7 percent from 15.8 billion dollars during the same period in FY24.

In January 2025, the United States of America contributed 298.5 million dollars, the United Kingdom contributed 443.6 million dollars, the United Arab Emirates contributed 621.7 million dollars, and Saudi Arabia contributed 728.3 million dollars.

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