In FY2023, Pakistan’s Gross Domestic Product (GDP) growth is expected to modestly improve due to structural changes, according to the Asian Development Bank (ADB).
According to the bank’s most recent Asian Development Outlook Supplement, Pakistan’s GDP growth is predicted to decrease in FY22 (which ends on June 30, 2022), as a result of fiscal tightening measures taken to control rising demand pressures and contain external and fiscal imbalances.
As the country’s inflation surged from 12.3 per cent in December 2021 to 21.3 per cent in June 2022, the bank slightly lowered Pakistan’s inflation for FY22 and dramatically for FY23.
“In addition to the effects of elevated global energy and food prices, the government’s efforts to revive the stalled International Monetary Fund (IMF) programme has meant raising power tariffs and withdrawing subsidies in the oil and power sectors,” said ADB.
In comparison to Sri Lanka, which boosted its policy rate by 950 basis points over the previous six months, the State Bank of Pakistan (SBP) has upped interest rates by 525 basis points since January 1. This also makes it one of the most active central banks in the region.
The ADB also reduced its 2022 growth prediction for Asia and issued a warning that things could become worse as a result of the conflict in Ukraine and supply chain disruptions that are expected to drive up costs.
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Although Covid-19’s effects had subsided, the region was now dealing with the consequences of Russia’s invasion of Ukraine, lockdowns in China, and aggressively raised interest rates, according to the Manila-based lender.
The bank reduced its 2022 growth prediction to 4.6 per cent to reflect the decline in developing Asia, which runs from Kazakhstan in Central Asia to the Cook Islands in the Pacific.
South Asia’s economy is anticipated to grow less than the projected rate of growth in the Asian Development Outlook 2022.
