The World Bank has projected Pakistan’s economy to grow by 2 per cent in the next fiscal year (2023-24), and revised downward the GDP growth rate by 1.6 per cent to 0.4 per cent for the current fiscal year (2022-23).
In its report “Global Economic Prospects”, the World Bank stated that continuing effects of the 2022 floods, compounded by worsening social tensions, high inflation, and policy uncertainty are estimated to have limited growth in Pakistan, Business Recorder reported.
Pakistan’s agriculture output seems likely to have contracted for the first time in two decades.
“In Pakistan, the lasting effects of the August 2022 floods, along with policy uncertainty and limited foreign exchange resources to pay for imports of food, energy, and intermediate inputs, have depressed activity, with industrial production contracting by about 25 percent in the year to March 2023,” read the report.
It added, “With dwindling foreign exchange reserves and stagnant remittances, the government has increased exchange rate flexibility, allowing the Pakistani rupee to depreciate by 20 per cent since the start of the year. Consequently, headline consumer price inflation has risen sharply, reaching 38 percent in the year to May, its highest level since records began in the late 1970s.”
It further stated that Pakistan’s economic recovery in the next two fiscal years is expected to be anaemic, with growth of 2 and 3 per cent, respectively.