The Asian Development Bank (ADB) expects Pakistan’s economic growth to fall to 3.5 percent in the fiscal year 2022-23, mainly due to devastating floods, tightening of monetary policy and substantial fiscal and external imbalances. Actions have been taken. on Wednesday.
ADB said in its Asian Development Outlook (ADO) 2022 update that Pakistan’s GDP growth in 2021-22 was driven by private consumption and growth in agriculture, services and industry, particularly large-scale manufacturing sectors.
“But in FY23 — coupled with climate change and Pakistan’s key policy efforts — ADB’s low growth projections also reflect double-digit inflation,” the report said.
“The recent devastating floods in Pakistan have put the country’s economic landscape at serious risk,” Yong Yee, ADB’s country director for Pakistan, was quoted as saying in the report.
“We hope that flood-related reconstruction and economic reforms will mobilize significant international financial assistance, stimulate growth, and preserve social and development spending to protect the vulnerable.”
The development was triggered by unprecedented monsoon rains in the South and South-West regions of Pakistan and floods caused by snowmelt in the northern regions, which affected about 33 million people in the country, destroying homes, crops, Bridges, roads and livestock have been washed away, resulting in a loss of $30,000. A billion
The report also stated that “the economic outlook will largely be shaped by the restoration of political stability and the continued implementation of reforms under the reinvigorated International Monetary Fund (IMF) program.”
According to the latest update, private consumption in Pakistan improved by 10 percent in FY22, boosting employment conditions and household incomes.
Agricultural output grew by 4.4 percent in FY22, boosted by larger crops and livestock production.
“Agriculture growth is expected to moderate next year due to flood damage and high input costs, which may dampen growth in services, particularly wholesale and retail,” the report said. retail trade,” the report said.
ADB observed that fiscal adjustment and fiscal tightening are expected to suppress domestic demand in the current fiscal year.
“Devaluation of the rupee coupled with capacity and input constraints due to higher import prices, coupled with reduced demand, will reduce the industry’s output,” it said.
Inflationary pressures increased sharply in the fourth quarter of FY22 (April-June), driven by the end of fuel and power subsidies, significant depreciation of the rupee, and rising international commodity prices. .
“Inflationary pressures will remain high in FY23 and inflation is forecast to rise to 18 percent,” the ADB report said.
“In addition to floods, higher inflation with a possible fiscal slowdown as general elections approach, and higher-than-expected increases in global food and energy prices are downside risks to the outlook.”
On Tuesday, the international lender said it was working on an aid package for flood-ravaged Pakistan.
The ADB report summarizes that developing Asia continues to recover as many economies ease restrictions from the COVID-19 pandemic.
“However, global uncertainty is undermining the prospects for a return to strong and lasting growth. Chief among the concerns is the Russian invasion of Ukraine, which has contributed to rising food and fuel prices and fiscal tightening in advanced economies. What is it.
