The World Bank says growth rate in Pakistan is expected to be moderate from 5.7% in FY2020/21 to 4.0% in 2022/23 as foreign demand slowed significantly and policy support is withdrawn to contain external and fiscal imbalances.
ISLAMABAD: (UrduPoint/Pakistan Point News-June 8th, 2022) The World Bank (WB) on Wednesday predicted a moderate Gross Domestic Product (GDP) growth rate for Pakistan standing at 4% for the incoming fiscal year, 2022-23.
In it's report, the WB mentioned the Pakistani government's preliminary estimate for real GDP (factor cost) growth for the outgoing FY — that is 6%.
It also mentioned the regional economies, saying that these prioritised structural reforms to boost their economic growth.
The WB said, “In Pakistan, growth is expected to be moderate from 5.7% in FY2020/21 to 4.0% in 2022/23 as foreign demand slowed significantly and policy support is withdrawn to contain external and fiscal imbalances,”.
The Pakistan's government had officially approved projections of 5 per cent for the next budget.
The government also improved its monetary policy framework by reinforcing its central bank's functional and administrative autonomy, which restricted the government from borrowing from the central bank, and entrenching price stability as monetary policy’s Primary objective.
Policy rates were raised by 7 percentage points in response. In India, rising inflationary pressures led to an unscheduled policy rate hike in May. In Pakistan, the central bank raised rates by 4 percentage points since April. Some authorities implemented policies to cushion the impact of high inflation. In Pakistan, for example, the government announced an energy price reduction package in February (World Bank 2022). However, gasoline and diesel pump prices were recently increased, it added.
For the region excluding India, stronger-than-expected rebounds from the pandemic in Bangladesh and Pakistan helped to boost activity through early 2022, helping to maintain robust growth during their fiscal year 2021/22, ending June 2022. In Bangladesh and Pakistan, goods exports grew by over 25% so far this fiscal year (to April), and manufacturing production in both countries expanded at its fastest pace in at least four years. But the war in Ukraine dampened activity, as rising food and energy prices stunted purchasing power and increased uncertainty.
The WB report stated that the Russian Federation’s invasion of Ukraine weighed on growth in the South Asia Region (SAR) after a solid recovery in the second half of last year and amplified pre-existing vulnerabilities.
While the direct impacts from trade and financial exposure to Russia and Ukraine are minimal, spillovers from rising commodity prices, higher borrowing costs and weaker external demand are significant.
