The Asian Development Bank (ADB) warned on Wednesday that Pakistan’s economic growth rate will decrease to 4% in FY2022, from 5.6% in FY201, because of stricter fiscal and monetary policy.
The Asian Development Outlook (ADO) 2022 predicts that Pakistan’s GDP growth would drop to 4% in FY2022 as the government works to minimise the current account deficit, increase international reserves, and control inflation.
However, private consumption and investment will boost the GDP to 4.5 percent in FY2023.
Following the epidemic, Pakistan’s economy has progressively recovered, according to the ADB Country Director Yong Ye.
“This has sped up the growth of industry and services. For growing inflation and external imbalances, it must support structural changes through appropriate fiscal and monetary policy. Comprehensive tax policy and administrative improvements are also required to support crucial public services.”
According to ADB, industrial development would slow in FY2022, because of fiscal and monetary tightening, a major devaluation of the local currency, and rising domestic oil and power costs. Agriculture is likely to continue contributing to GDP growth, aided by government input subsidies and rising wheat and sugarcane support prices.
Inflation is predicted to rise to roughly 11% in FY2022 from 8.9% in FY2021, because of increasing global energy costs, severe currency depreciation, and supply disruptions.
Because of the current Russia-Ukraine war, increased oil costs will hit Pakistan.
“As a net importer of oil and gas, Pakistan will continue to face severe inflationary pressures for the duration of FY2022,” it stated.
Inflation will fall to 8.5% in FY2023, as fiscal consolidation continues and oil and commodity prices stabilise.
