The Pakistan Prosperity Index (PPI) reached an all-time high of 135.9 in June 2021, an increase of 12.8 per cent after the decline in April and May 2021, said Policy Research Institute of Market Economy (PRIME), an Islamabad-based think tank, in its latest report compiled by Business Recorder.
This figure signals an increase in economic prosperity at the back of higher business confidence and activity amid the fourth wave of Covid-19, added the institute.
According to details, the trade volume witnessed an increase of Rs548 billion year-on-year (YoY) and Rs360 billion month-on-month (MoM) on account of resumption of business activities and opening up of international markets.
Private sector borrowing from banks showed a surge of Rs170 billion YoY and Rs25 billion MoM increase. This increasing trend can be credited to lower cost of borrowing and a reduction in the budget deficit, which has reduced the government’s borrowing needs from the commercial banks thus reducing the crowding out effect.
In the context of purchasing power, the YoY Inflation was reported at 9.7 per cent, while the MoM inflation clocked at negative 0.3 per cent. The prevalent high levels of inflation are at the back of hike in food and energy prices.
The report added that Large Scale Manufacturing (LSM) increased by 4.36 per cent MoM. “This increase can be attributed to the higher demand emanating from ease in lockdown, mass vaccination and opening up of business. In addition, higher production cost fueled by higher energy prices, and supply side disruptions of raw material all had a fair share in restricting LSM’s output. Notwithstanding, the overall economic outlook, as measured by PPI, seems to be encouraging”.
“Addressing the supply side shocks of basic food items is pertinent to lower food inflation, which is the main cause of rising overall inflation in the economy. These supply side shocks call for more liberal trade measures and elimination of state intervention in the market,” it said.
