Depreciation in Rupee against the dollar has affected the Gross Domestic Production (GDP) in dollar terms. According to data released from State Bank of Pakistan, the GDP stands at $313.3 billion by end of June 2018.
Last year Pakistan’s GDP was $304.97 billion that was the end of June 2017. A highest GDP growth rate of 5.8% has been recorded for the fiscal year 2018. In terms of dollar, the economy size has decreased due to the depreciation of Rupee in four rounds since December 2017. Now the actual 5.8% growth has reduced to 2.7%.
The average month-to-month exchange rate has been used to calculate the GDP and it came to around Rs.108 per dollar. The Rupee is struggling at Rs.128 mark and foreign exchange reserves are increasing current account deficit. Something needs to be done on strong grounds to stay save against balance of Payment crises.
The SBP has already increased the key interest rate by 175 basis points since January, taking it to 7.5% to tackle increasing inflationary pressure in the months to come.
Additionally, the 5.8% growth registered during FY18 is also not enough for a developing economy like Pakistan to absorb the number of job seekers that pile up each year. According to experts and global financial institutions, Pakistan needs at least 7% growth to create enough jobs and tame rising unemployment.