ISLAMABAD: The Asian Development Bank (ADB) has emphasized the importance of Pakistan’s adherence to an economic adjustment programme until April 2024 to restore macroeconomic stability and gradually recover the country’s growth, as stated in its recent report.
As per the Asian Development Outlook (ADO) for September 2023, Pakistan’s gross domestic product (GDP) growth is anticipated to make a modest recovery, reaching 1.9% in the fiscal year 2024 (from 1 July 2023 to 30 June 2024), compared to the previous fiscal year’s growth of 0.3%.
However, it should be noted that the economy still faces significant downside risks, including potential global price shocks and a slowdown in global economic growth.
According to Yong Ye, ADB Country Director for Pakistan, Pakistan’s economic prospects are intricately linked to the consistent implementation of policy reforms to stabilize the economy and reinforce fiscal and external reserves.
Critical aspects for this revitalization include greater fiscal discipline, adopting a market-determined exchange rate, and making swift progress in energy sector reforms and state-owned enterprise improvements. These measures are essential for stimulating economic growth and safeguarding social and development expenditure.
FY2023 witnessed Pakistan’s economy adversely affected by severe floods, global price shocks, and political instability, leading to weakened growth and rising inflation.
The ADO suggests implementing the economic adjustment program and conducting a smooth general election in FY2024 should enhance confidence. Furthermore, easing import controls is expected to support investment.
Additionally, favorable weather conditions and government relief initiatives such as providing free seeds, subsidized credit, and fertilizers are anticipated to aid the recovery of the agriculture sector, benefiting the industrial sector through improved access to crucial imports.
In terms of inflation, it is projected to decrease to 25% in FY2024 from 29.2% in FY2023 due to factors such as base-year effects, stabilization of food supply, and moderation in inflation expectations.
However, inflationary pressures may persist due to sharp increases in energy tariffs as part of the economic adjustment program and the ongoing rupee depreciation.
The ADB remains committed to fostering a prosperous, inclusive, resilient, and sustainable Asia and the Pacific region while continuing efforts to eradicate extreme poverty. Established in 1966, it is owned by 68 member countries, with 49 of them from the region.
