Pakistan must correct its macroeconomic imbalance on the external front: Enrique Blanco, World Bank

World Bank in co-ordination with Sustainable Development Policy Institute (SDPI) launched Pakistan Development Update Fall 2017, World Bank’s bi-annual publication on economic development in Pakistan.

The session held in a local hotel highlighted the development in Pakistan’s economy. According to the report, Pakistan’s growth has remained strong in FY17 but vulnerabilities are starting to emerge in the economy; particularly on the external front. Addressing the gathering, World Bank’s Lead Country Economist Mr. Enrique Blanco Armas highlighted the imbalance that is widening in the last two years as Pakistan faces an acute shortage of funds.

According to the WB economists, deficit has increased in the last year as a result of increase in provincial spending and lower tax revenues.

World Bank expects the deficit to reach 6% of the GDP in the coming year.

Mentioning the declining reserves, Mr. Enrique Blanco said that in the last year Pakistan’s reserves have declined from 4 month import cover to just 2.7 months.

World Bank Projections

• Pakistan to face extreme pressure on CAD during the next 2 years
• Inflation to see a gradual increase; 6% in FY18, 7% in FY19
• WB forecast GDP growth of 5.5% in FY18 and 5.8% in FY19
• Forecasts FY18 fiscal deficit at 6%, FY19 at 5.8%
• Foreign Reserves to continue declining in FY18 and FY19