[vc_row][vc_column][vc_column_text dp_text_size=”size-4″]Pakistan’s economic growth is expected to slow significantly to 0.6% in FY2023 from 6% the previous fiscal year, according to a new report released on Tuesday by the Asian Development Bank (ADB). This comes as the economy struggles to recover from last year’s devastating floods, as well as from ballooning inflation, a current account deficit, and an ongoing currency crisis.
“Pakistan’s economy continues to face significant headwinds, and last year’s catastrophic floods exacerbated the country’s economic and financial challenges,” said ADB Country Director for Pakistan Yong Ye.
However, he added, “Pakistan can bounce back with a history of resilience in the face of adversity and depending on a rapid return to stability twinned with robust macroeconomic and structural reforms.”
He also stated that ADB will continue to support Pakistan’s economic recovery and development plans.
According to the Asian Development Outlook (ADO) April 2023 report, Pakistan’s growth is expected to reach 2% in FY2024 if macroeconomic stability, reform implementation, post-flood recovery, and improving external conditions are restored.
Read More: Pakistani rupee hits record low to Rs288 against US Dollar
Climate change, according to the outlook, poses a serious threat to Pakistan’s economic, social, and environmental development.
According to the Global Climate Risk Index, Pakistan has been ranked among the top ten most vulnerable countries in the world over the last two decades.
According to the report, industrial growth will continue to slow in FY2023, owing to fiscal and monetary tightening, a significant depreciation of the local currency, and higher domestic oil and electricity prices.
“The fiscal deficit is projected to narrow slightly to the equivalent of 6.9% of GDP in FY2023. If the International Monetary Fund (IMF) program remains on track, the deficit will likely continue to shrink in the medium term as measures to mobilize more revenues—such as harmonizing general sales taxes—gain momentum,” said the report.
Pakistan’s government remains busy wooing the IMF to revive the stalled Extended Fund Facility (EFF) programme, which if approved by its board would release a funding tranche of over $1 billion.
According to the ADO report, average inflation is expected to more than double from 12.2% in FY2022 to 27.5% this fiscal year.
According to the study, headline consumer inflation rose to 25.4% in the first seven months of the fiscal year due to higher domestic energy prices, a weaker currency, flood-related supply disruptions, and import restraint due to the balance of payment crisis.
“As a net importer of oil and gas, Pakistan will continue to face high inflationary pressures throughout FY2023,” it said.
According to well-informed sources, ADB dispatched its Accountability Mission last week to determine the eligibility of complaints about four key projects in Pakistan, including the Peshawar Sustainable Bus Rapid Transport Corridor Project.[/vc_column_text][/vc_column][/vc_row]
