Pakistan’s economy is forecast to slow to 3.5 percent in fiscal year 2023 amid devastating floods, policy tightening, and critical efforts to tackle sizable fiscal and external imbalances, the Asian Development Bank (ADB) said in a report released Wednesday.
The slowdown has been predicted even as growth in FY2022 is expected to have reached 6.0%.
According to the Asian Development Outlook (ADO) 2022 Update, Gross Domestic Product (GDP) growth in Pakistan in FY2022 was propelled by higher private consumption and an expansion in agriculture, services, and industry — particularly large-scale manufacturing.
But in FY2023, as well as climate headwinds and Pakistan’s critical policy efforts, ADB’s lower growth projection also reflects double-digit inflation. The latest report is an update to ADB’s annual flagship economic publication.
“The recent devastating floods in Pakistan add profound risk to the country’s economic outlook,” said ADB Country Director for Pakistan Yong Ye.
“We hope that flood related reconstruction and economic reforms will catalyze significant international financial support, stimulate growth, and preserve social and development spending to protect the vulnerable. ADB is preparing a package of relief, rehabilitation, and reconstruction to support people, livelihoods, and infrastructure immediately and in the long-term,”Yong Ye added.
The economic outlook will be shaped largely by the restoration of political stability and the continued implementation of reforms under the revived International Monetary Fund program to stabilize the economy and restore fiscal and external buffers.
According to the update, private consumption expanded by 10% in FY2022 resulting in improved employment conditions and higher household incomes.
Agriculture output increased by 4.4% in FY2022 supported by strong performances in crops and livestock.—APP