The World Bank’s latest Global Economic Prospects report projects that Pakistan’s economy will grow by 2% in the next fiscal year, below the 3.5% target set by the National Economic Council. Factors impacting this projection include the aftermath of the August 2022 floods, policy uncertainty, and limited foreign exchange resources. The Pakistani rupee has depreciated by 20% since the start of the year, leading to a sharp rise in consumer price inflation to 38%, the highest level since the late 1970s.
Read: Pakistan’s Annual Inflation Hits Record High in May
The report also highlighted that real interest rates have turned deeply negative as policy rate increases have not kept pace with inflation. Poverty has been on the rise in countries like Afghanistan, Pakistan, and Sri Lanka due to economic pressures. However, a downward trend is expected to resume more slowly due to high inflation, slow employment recovery, and withdrawal of pandemic-related food support.
The World Bank report also noted the adverse impact of import restrictions and food export bans on the economies of Bangladesh, Nepal, Pakistan, and Sri Lanka, although some restrictions have been relaxed. Growth in the South Asian region is forecasted to slow marginally in 2023 and more significantly in 2024, with risks mainly on the downside due to potential global and domestic policy tightening, social tensions, and climate change-related extreme weather events.
Read: Pakistan’s FY24 Budget Outlook Amid Economic Turbulence
