WASHINGTON – Pakistan’s growth is expected to slow further to 2.7% in nextfiscal year, which begins July 16, as domestic demand remains depressed andas current account and fiscal deficits diminish only gradually, accordingto a new report by the World Bank.
The World Bank has lowered its expectations of global economic growth forthis year in June 2019 Global Economic Prospects: Heightened Tensions,Subdued Investmentlink, sayingthat although the picture for poorer countries is expected to stabilize in2020, economic momentum remains weak.
*South Asia Outlook*
South Asia continued to enjoy solid economic activity in 2018, posting 7percent GDP growth due to robust domestic demand amid weakening trade andmanufacturing. Regional output is estimated to have expanded by 7 percentin 2018. Economic activity was underpinned by strong private domesticdemand.
Pakistan was a notable exception, with a broad-based weakening of domesticdemand over the past year against the backdrop of tightening policies aimedat addressing the country’s macroeconomic imbalances. The country’s growthis estimated to decelerate to 3.4% in FY 2018/19, which ends July 15.
Pakistan has recently experienced a significant rise in inflation driven bycurrency depreciation, which was followed by several policy rate hikes overthe course of FY2018/19. There has been limited progress in fiscalconsolidation in the region.
However, private consumption and investment remained robust in much of theregion, offsetting a slowdown in Pakistan.
Government spending growth moderated in 2018, expanding closer tohistorical averages following rapid growth in 2017. Net exports continuedto contribute negatively to regional growth, with import growth remainingstronger than export growth amid solid domestic demand.
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Pakistani authorities have revised the growth estimate for FY2017/18 from5.8 percent to 5.2 percent in February 2019.
In India, the largest economy in the region, GDP grew by 7.2 percent inFY2018/19 (April 1, 2018 to March 31, 2019)—the same pace as shown for theprevious year by upwardly revised data.
Growth in India is projected to further accelerate to 7.5% in FY 2019/20,which begins April 1. Private consumption and investment will benefit fromstrengthening credit growth in an environment of more accommodativemonetary policy, and with inflation below the Reserve Bank of India’starget.
Bangladesh’s growth is projected to pick up to 7.4% in FY 2019/20, whichbegins July 1, underpinned by strong infrastructure spending and solidprivate investment.
Sri Lanka is forecast to accelerate to 3.6% in 2020 supported by a pickupin services sector activity and solid infrastructure investment.
Economic activity in Afghanistan is forecast to expand 2.4% in 2019,Nepal’s GDP is projected to grow 6.4% in FY 2019/20, which begins July 16,and Bhutan is expected to hold steady at 5.4% in FY 2019/20, which beginsJuly 1.
