What is widely discussed at present is the growth rate of GDP by 20.1% in the first quarter of the current fiscal year. Is it feasible for our economy? If our currency is coming 15% above the Afghani currency at present, how could we guess the GDP growth at a stronger level?
What our able economists expect remains worth reading when the growth rate is being presented in such an analytically tricky way. This stands in the paradox of 24.4% in the related 3 months of the previous fiscal year. This growth not only hides the disruption caused by the second pandemic wave, but the GDP was still 9.2% lower than in the first quarter of 2019-20 in the pre-pandemic time.
Year on year robust growth in the first quarter is not acceptable to the analysts, as the real GDP in the first quarter of the financial year 2022 not only posted a succeeding slowdown of 16.9% over the quarter four of the financial year of 2021 but also lagged the level of the first quarter of the financial year of 2020 by a substantial 9.2%.
The NSO, as news goes, has expected the GVA growth in the first quarter of the financial year 2022 at 18.8% steered by the dizzying pace of year on year growth in the industry (46.1%), led by manufacturing (49.6 %), construction (68.3 %), a fairly restful accomplishment of services (11.4%), agriculture and allied activities (4.5%).
What does this deceptively high GDP expansion portend for monetary policy? In the first quarter of the financial year 2022, the GDP growth is mildly lower than the Monetary Policy Committee’s forecast of 21.4%.
As a result, we expect the status quo to continue until consolidating domestic demand supplants supply-side constraints as the key driver of the inflationary anxieties.
We expect policy normalisation to begin in February 2022, with an obvious modification in the monetary policy position to be fair or neutral from the standing accommodative stance. So believe erudite experts.