WASHINGTON: The International Monetary Fund projected on Wednesday thatPakistan’s growth will moderate to 4.7 per cent in fiscal year 2019 from5.6pc in 2018.
In its regional economic outlook update for the Middle East, North Africa,Afghanistan and Pakistan (MENAP) region on Wednesday, the IMF notes that“an increase in macroeconomic vulnerabilities and domestic policy slippageshave weakened Pakistan’s economic outlook, with growth now projected tomoderate to 4.7pc in FY19”.
In January, the IMF said it expected growth in Pakistan to pick up in2018-19. The government has targeted 6.2pc growth for next year in itslatest budget.
Contrary to the govt target of 6.2pc growth for next year, the Fund says itis likely to be 4.7pc
The report credits improved energy supply, investment related to theChina-Pakistan Economic Corridor, and strong credit growth for the raise inPakistan’s growth to an estimated 5.6pc in the outgoing FY18, from 5.3pclast year.
The report, however, places Pakistan among the countries where “delays inimplementation or completion of structural reforms and political and policyuncertainty” continue to weigh on growth. Besides Pakistan, Jordan,Morocco, Tunisia and Lebanon are also placed in this category.
Pakistan is also placed among the countries where upcoming elections and amore challenging political environment could slow the reform process.
“A high perception of corruption and lack of transparency in some of thesecountries could not only affect macroeconomic outcomes directly, reducinginvestment and productivity, but could also heighten social tensions andhinder reform,” the IMF warns.
The report notes that some countries in the MENAP region are slowly takingsteps to improve governance and transparency while additional efforts arealso being made to bolster the business environment, with Pakistan recentlystrengthening its bankruptcy framework.
After three years of decline, exports of MENAP oil-importing countries grewby 6.4pc in 2017 and are projected to accelerate by 8.4pc in 2018 and 8.6pcin 2019.
In Pakistan, Egypt and Tunisia, this was largely due to improved externaldemand and greater exchange rate flexibility while Pakistan also benefitedfrom a pickup in cotton prices.