The State Bank of Pakistan (SBP) has said that the economy posted tremendous growth in FY-2021 and FY-22. However, the central bank also cautioned that in the future, the economic stability will depend on successfully navigating external challenges like balance of payment and policy continuation.
The State Bank of Pakistan (SBP) has issued the Financial Stability Review (FSR) for CY21. The review presents the performance and risk assessment of various segments of the financial sector including banks, non-bank financial institutions, financial markets, financial market infrastructures and non-financial corporates.
The report added that in the future, the economic stability would rely upon “strength of external buffers,” policy continuity, and global commodity price.
The banking sector will successfully sustain the “adverse economic shocks” in the next three years.
“Amid the dynamic and challenging environment both at domestic and global fronts, SBP, will continue to undertake initiatives … and remains vigilant to the emerging risks.”
The report said the global economic recovery post Covid-19 continued in 2021 on the back of strong response to the pandemic and extensive vaccination drives.
“However, supply chain disruptions fueled inflationary pressures and the recurring waves of new COVID-19 variants continued to pose challenges to the global economic activity and financial markets,” the report added.
The review highlights that the domestic economy navigated through two COVID-19 waves during CY21 without significant impact due to effective management of the pandemic, which facilitated a strong revival in economic activity.
The review added that although the GDP grew by 5.7percent in FY21, with estimations to 6.0percent in FY22, rising international commodity prices led to external account pressures.
“SBP took a number of macro-prudential and monetary policy measures to stabilize the external account, moderate the domestic demand and address associated risks.”
The banking sector posted a growth of 19.6percent, and their deposits grew by 17.3percent,
The report added more than 10m people have created their IDs on Raast, Pakistan’s Instant Payment System, with aggregated value of the transactions crossing PKR 36billion.
The Roshan Digital Account initiative, introduced in 2020 crossed 416,000 with an inflow of over $4.4 billion by May 2022.
The initiatives like allowing resident Pakistanis to remotely open bank accounts have played a key role in enhancing financial inclusion, it added.