World Bank report projects yet another grim picture of Pakistan economy
WASHINGTON – Pakistan’s growth is expected to slow further to 2.7% in next fiscal year, which begins July 16, as domestic demand remains depressed and as current account and fiscal deficits diminish only gradually, according to a new report by the World Bank.
The World Bank has lowered its expectations of global economic growth for this year in June 2019 Global Economic Prospects: Heightened Tensions, Subdued Investment link, saying that although the picture for poorer countries is expected to stabilize in 2020, economic momentum remains weak.
*South Asia Outlook*
South Asia continued to enjoy solid economic activity in 2018, posting 7 percent GDP growth due to robust domestic demand amid weakening trade and manufacturing. Regional output is estimated to have expanded by 7 percent in 2018. Economic activity was underpinned by strong private domestic demand.
Pakistan was a notable exception, with a broad-based weakening of domestic demand over the past year against the backdrop of tightening policies aimed at addressing the country’s macroeconomic imbalances. The country’s growth is estimated to decelerate to 3.4% in FY 2018/19, which ends July 15.
Pakistan has recently experienced a significant rise in inflation driven by currency depreciation, which was followed by several policy rate hikes over the course of FY2018/19. There has been limited progress in fiscal consolidation in the region.
However, private consumption and investment remained robust in much of the region, offsetting a slowdown in Pakistan.
Government spending growth moderated in 2018, expanding closer to historical averages following rapid growth in 2017. Net exports continued to contribute negatively to regional growth, with import growth remaining stronger than export growth amid solid domestic demand.
Pakistani authorities have revised the growth estimate for FY2017/18 from 5.8 percent to 5.2 percent in February 2019.
In India, the largest economy in the region, GDP grew by 7.2 percent in FY2018/19 (April 1, 2018 to March 31, 2019)—the same pace as shown for the previous 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 from strengthening credit growth in an environment of more accommodative monetary policy, and with inflation below the Reserve Bank of India’s target.
Bangladesh’s growth is projected to pick up to 7.4% in FY 2019/20, which begins July 1, underpinned by strong infrastructure spending and solid private investment.
Sri Lanka is forecast to accelerate to 3.6% in 2020 supported by a pickup in 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 begins July 1.