Pakistan’s GDP growth rate is projected to recover slightly, but inflationwould jump upward substantially in the current fiscal year, says AsianDevelopment Bank (ADB).
The Bank, in its latest report, “Asian Development Outlook Supplement,”noted that inflation in Pakistan is highest after Sri Lanka in the region.
The report further stated Pakistan’s inflation is marginally revised up forFY22 and substantially so for FY23. Headline inflation reached 21.3 percentin June 2022, up from 13.8 percent in May 2022. In addition to the effectsof elevated global energy and food prices, the government’s efforts torevive the stalled International Monetary Fund (IMF) program have meantraising power tariffs and withdrawing subsidies in the oil and powersectors.
The Bank further stated that GDP growth in Pakistan is expected to moderatein FY22 (ended 30 June 2022) on fiscal tightening measures to managegrowing demand pressures and contain external and fiscal imbalances. Growthis projected to recover slightly in FY23, supported by structural reforms.
In Afghanistan, sanctions and the freeze on international developmentassistance other than humanitarian aid have significantly constrainedeconomic activity, the report informed.
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It was further noted that headline inflation is at double-digit levels inmost of the Caucasus and Central Asia, Mongolia in East Asia, Pakistan andSri Lanka in South Asia, and the Lao People’s Democratic Republic (LaoPDR), and Myanmar in Southeast Asia. Inflation in India is at 7 percent,above the 2–6 percent target range of the Reserve Bank of India (RBI). Butthe headline and core inflation in the rest of developing Asia’s largeeconomies remain manageable. Accordingly, inflation remains moderate onaverage and much lower than elsewhere in the world for the region as awhole.
The report also noted that many central banks have started hiking rates tocurb inflation and safeguard financial stability. State Bank of Pakistan(SBP) has hiked the policy rate by 525 points from January-July after SriLanka with 950 points.
