According to the Asian Development Bank’s (ADB) September report, Pakistan’s gross domestic product (GDP) growth for FY24 is anticipated to rebound to 1.9% from the previous year’s 0.3% in FY23. This growth projection for FY24 is slightly lower than the previous estimate but is contingent on several factors, including the continuation of reforms, supportive macroeconomic policies, recovery from flood-related supply disruptions, and improving external conditions.
Pertinent to note is that Government of Pakistan has projected its Economic Growth for FY2024 at 3.5 percent, pinning large hopes from recovery in Agricultural Production.
The report highlights the potential positive impact of political stability expected after the upcoming general elections later this year. Such stability could boost business confidence, and Pakistan’s recently agreed standby arrangement with the International Monetary Fund (IMF) is poised to support economic stabilization and help rebuild fiscal buffers.
The growth rate in FY23 is estimated to have sharply decelerated to 0.3%, reversing some of the gains made during the post-pandemic recovery. This slowdown was largely attributed to significant flood damage at the beginning of FY23, which adversely affected cotton and rice crops and resulted in a one-third reduction in agricultural sector growth compared to FY22.
Additionally, the report highlights concerns about high inflation levels in Pakistan. It suggests that inflation is expected to remain elevated, with an estimated rate of 25% for FY24. This projection is notably higher than the earlier estimate of 15%. Elevated inflation can have far-reaching implications for the economy, affecting purchasing power, living standards, and overall economic stability.
In summary, the ADB’s report outlines both opportunities and challenges for Pakistan’s economic outlook. The forecasted GDP growth recovery in FY24, while positive, is subject to various factors, including political stability, economic reforms, and external conditions. However, the report also underscores the pressing issue of high inflation, which requires careful attention and management to ensure sustained economic growth and stability in Pakistan.
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