ISLAMABAD — Pakistan’s economic growth rebounded to 3.9% in fiscal year(FY) 2021 (ending 30 June 2021) and is expected to reach 4.0% in FY2022 asbusiness activity gradually resumes in the second year of the coronavirusdisease (COVID-19) pandemic, the Asian Development Bank (ADB) said in areport on Wednesday.
According to the Asian Development Outlook (ADO) 2021 Update, ADB’s annualflagship economic publication, Pakistan’s economy is expected to continuerecovering in FY2022, supported by stronger private investment, improvingbusiness activity, a steady vaccine rollout, and economic stimulus measuresfor FY2022. Yet, significant uncertainty clouds the economic outlook overthe course of the pandemic in Pakistan and worldwide.
“Pakistan’s economy is on the path to recovery, supported by promisinggrowth in the industry and services sectors,” said ADB Country Director forPakistan Yong Ye. “The continued rollout of the COVID-19 vaccinationprogram, structural reforms, and the expansion of social protectionprograms are all key to ensuring inclusive and sustainable growth. Fiscalincentives and policies to boost export competitiveness, bolster theperformance of the manufacturing sector, and augment private investmentwill continue to play an instrumental role in strengthening the economicoutlook.”
Pakistan’s economic growth in FY2021 was supported by improved COVID-19containment strategies through the second and third waves of infections andcontinued accommodative fiscal and monetary policies that accelerated therecovery across all sectors. Growth in industry, predominantly constructionand small-scale manufacturing, and services are forecast to improve inFY2022. Agriculture is also expected to continue supporting GDP growth.
Inflation declined to 8.9% in FY2021. Food price inflation remained highdue to supply chain disruptions, increased prices for wheat and sugarcane,and an extended wet monsoon. Rising international oil prices boosted energyprice inflation. Yet, inflation for other goods eased thanks to theappreciation of the Pakistani rupee and a postponement of planned hikes forelectricity tariffs and domestic fuel prices.
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The State Bank of Pakistan, the central bank, maintained its policy rate at7% to support the economic recovery. Investment is expected to strengthenas global sentiment improves and the International Monetary Fund-supportedstabilization program continues to progress.
ADB is committed to achieving a prosperous, inclusive, resilient, andsustainable Asia and the Pacific, while sustaining its efforts to eradicateextreme poverty. Established in 1966, it is owned by 68 members—49 from theregion.
