April 7, 2019 (MLN): World Bank in its latest report has projected that Pakistan’s economic growth will decelerate to 3.4 percent in FY19 and 2.7 percent in FY20 as fiscal and monetary policies are tightened to address macroeconomic imbalances.
The report further highlights that, domestic demand is expected to contract while at the same time export growth will be gradual.
On the supply side, the agriculture and industrial sectors will also grow significantly lower in FY19 and FY20.
Moreover, growth is expected to recover to 4% in FY21 as structural reforms take effect and macroeconomic conditions improve.
Remittances flows are likely to support the current account balance next year. A more stable external environment will also support a pickup in economic activity starting from FY21, says the report.
The report further adds that, trade deficit is projected to remain elevated during FY19, but to narrow in FY20 and FY21 as the impacts of currency depreciation and other regulatory measures to curb imports set in.
“Pakistan’s growth must be driven by investment and productivity”, said Illango Patchamuthu, World Bank Country Director for Pakistan, adding that it is entirely possible for Pakistan to transform its regulatory environment and reduce the cost of doing business.
On the revenue front, he said, “reforms to improve tax administration and widen the tax base are critical”.
“Over the adjustment period and beyond, actions outlined in the recently announced Ehsaas Program can protect the poor and vulnerable through social safety nets and safeguarding public spending on health and education.” he added.
