ADB forecast for the Pakistan economic recovery in FY 2021

ADB forecast for the Pakistan economic recovery in FY 2021

The Asian Development Bank (ADB) in an update of its Asian Development Outlook (ADO) 2020 report has forecasted broad economic recovery for Pakistan in FY2021, with GDP growth estimated to rebound to 2.0 percent.

The projected GDP growth is lower than forecast in ADO 2020. As per the latest forecast, the ADB assumes that the COVID-19 impact will subside by the end of 2020—the end of the second quarter of FY2021—allowing global conditions to normalize and economic sentiment to improve.

The report also assumes the resumption of structural reform under an ongoing IMF Extended Fund Facility program to address macroeconomic imbalances. The government has proposed detailed economic stimulation measures in its FY2021 budget.

In addition to reallocating Rs7 billion from the Federal Public Sector Development Programme budget to COVID-19 response, the proposed budget raises allocations for initiatives that provide social protection to the disadvantaged.

ADB was of the view that the flagship Ehsaas program will be scaled up from Rs190 billion in FY2020, or 2.3pc of government expenditure, to Rs230 billion in FY2021, or 2.6pc.