Pakistan’s economic rise linked with political stability, claims NBP new report
The board of directors of the National Bank of Pakistan (NBP) has said that the economic outlook of the country will be shaped largely by the restoration of political stability.
The NBP — the government-owned commercial bank — in its outlook said that amid the devastating floods, policy tightening and critical efforts to tackle sizeable fiscal and external imbalances, Pakistan’s economy is forecast to slow down in the current fiscal year ending June 30, 2023.
“The economic outlook will be shaped largely by the restoration of political stability and the continued implementation of reforms under the revived International Monetary Fund (IMF) programme to stabilise the economy and restore fiscal and external buffers,” according to the board of directors.
Rehmat Ali Hasnie, president and chief executive officer (CEO) of the bank on behalf of the board of directors presented the country’s economic environment.
The global economy remains confronted with slowing growth, high inflationary pressure and geopolitical unrest, he said, adding that in most countries, the central banks are responding aggressively, leading to exchange rate depreciation pressure on most emerging market currencies.
According to him, Pakistan’s economy is facing deceleration due to multiple factors.
“The economic and fiscal outlook has deteriorated significantly with the catastrophic floods, as agricultural output of major crops is expected to decline shortly,” Hasnie said.
The economy has slowed down considerably, as most large-scale manufacturing (LSM) indicators were lower in July and August, compared with the same period of the last year.
Based on the currently available information, the GDP growth could fall to around 2 per cent in the current fiscal year, compared with the previous forecast of 3 to 4 per cent before the floods.
Meanwhile, higher food prices could raise the average headline inflation in the current fiscal year somewhat above the pre-flood projection of 18 to 20 per cent. Amid these challenges, the headline inflation fell last month due to an administrative cut in the electricity tariff.
“The current account and trade deficits also narrowed in August and September, respectively, and the rupee has recouped some of its losses; following the recent depreciation,” he said. The combined 7th and 8th review under the ongoing IMF programme was successfully completed on August 29, releasing a tranche of $1.2 billion, he noted.