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World Bank Predicts Bleak Economic Outlook for Pakistan: Growth to Remain Below 3% Until 2026

The World Bank’s recently published Pakistan Development Outlook report presents a bleak outlook for the country’s economy in the coming years.

In accordance with the report’s projections, Pakistan’s economic growth is expected to languish below the 3% mark until the year 2026. Specifically, growth rates are forecasted at 1.8% for the fiscal year 2023/24, 2.3% for 2024/25, and a modest increase to 2.7% by 2025/26.

The report underscores the pressing need for substantial structural reforms to invigorate growth, highlighting factors such as insufficient investment, persistent external imbalances, distortionary fiscal policies, and the substantial presence of the state within the economy as key obstacles to robust economic expansion.

While the report foresees relative stability in the current account deficit, with projections of 0.7% for 2023/24 and 0.6% for the subsequent two years, it anticipates a marginal decline in the fiscal deficit from 8% in the present fiscal year to 7.4% in the following year and further down to 6.6% by 2026.

Industrial growth, according to the report, is expected to hover around 1.8% in the current year, with a gradual increase to 2.2% in the next fiscal year and eventually reaching 2.4% by 2026.

Pakistan inflation drops to 20.7% in March

Despite these challenging economic indicators, the report offers a glimmer of hope on the inflation front, forecasting a decline from the current 26% to 15% by 2025 and further down to 11.5% by 2026.

However, the World Bank stresses the critical importance of a clearly defined, ambitious, and credible economic reform agenda to mitigate uncertainties and rebuild confidence. It emphasizes that risks to economic stability remain elevated, and fundamental policy constraints hindering sustainable growth need to be urgently addressed. Additionally, the report underscores the necessity of bolstering policy buffers to effectively manage potential economic shocks, given the country’s high debt levels and limited foreign exchange reserves.

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I am an accomplished graduate of Strategic Studies, driven by a fervent dedication to comprehending global affairs and devising impactful strategies. Equipped with a comprehensive skill set encompassing research, critical thinking, and persuasive communication, I possess a distinctive viewpoint and an unwavering commitment to fostering inclusive decision-making processes. As a versatile individual, I excel in collaborating with diverse groups in various settings, leveraging my strong interpersonal abilities to adapt seamlessly to new environments and surmount any challenges that arise. With a passion for contributing to strategic initiatives, I am eager to leverage my expertise and drive to effect positive change within the field.

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