Warning that downside risks to Pakistan’s economic outlook remain exceptionally high, the Asian Development Bank’s latest report says the country’s adherence to an economic adjustment programme through April 2024 will be critical for restoring stability and the gradual recovery of growth.
The regional financial institution in its report released on Wednesday said Pakistan’s adherence to an economic adjustment programme through April 2024 will be critical to restoring macroeconomic stability and the gradual recovery of the country’s growth.
According to the Asian Development Outlook (ADO) September 2023, Pakistan’s gross domestic product (GDP) growth is projected to recover modestly to 1.9% in fiscal year 2024 from 0.3% in FY2023, with price pressures remaining elevated, the report added.
However, significant downside risks to the outlook remain, including global price shocks and slower global growth.
The ADB also anticipates a decrease in Pakistan's inflation trends to 25% in FY2024 from the elevated 29.2% experienced in FY2023 in the wake of base-year effects setting in, normalisation of food supply, and a moderation in inflation expectations.
"However, sharp increases in energy tariffs under the economic adjustment programme, and the continued weakening of the rupee will keep inflationary pressures elevated," it added.
According to the Asian Development Bank (ADB), the gross domestic product (GDP) growth of Pakistan is expected to experience a modest recovery, reaching 1.9% in the fiscal year 2024 (spanning from July 1, 2023, to June 30, 2024), marking an improvement from the meagre 0.3% growth recorded in FY2023.
This anticipated recovery will come amidst the persistence of increased price pressures, and there remain significant downside risks to this outlook, primarily stemming from potential global price shocks and the potential for a slowdown in economic growth around the world.
ADB Country Director for Pakistan Yong Ye said that the country's economic prospects are closely tied to the steadfast and consistent implementation of policy reforms to stabilize the economy and rebuild fiscal and external buffers.
"Greater fiscal discipline, a market-determined exchange rate, and speedier progress on reforms in the energy sector and state-owned enterprises are key to reviving economic growth and protecting social and development spending," he added.