Pakistan’s economy to grow by 2% in the next fiscal year, says World Bank

The World Bank has projected Pakistan’s economy to grow by 2% in the next fiscal year, lower than the 3.5% target set by the government

The World Bank has projected Pakistan’s economy to grow by 2% in the next fiscal year, much lower than the 3.5% target set by the National Economic Council (NEC), the country's top economic body, saying the lasting effects of the August 2022 floods, along with policy uncertainty and limited foreign exchange resources have depressed activity in the country.

Also Read | Cash-strapped Pakistan announces early closure of markets, wedding halls to save energy

The conflicting estimates by the World Bank and the NEC came on June 6, reported the Dawn newspaper.

“In Pakistan, the lasting effects of the August 2022 floods, along with policy uncertainty and limited foreign exchange resources to pay for imports of food, energy, and intermediate inputs, have depressed activity, with industrial production contracting by about 25% in the year to March 2023,” the World Bank said in its latest Global Economic Prospects report.

Also Read | Analysis | Can Pakistan pick up the pieces

It said that the continuing effect of last year’s floods in Pakistan, compounded by worsening social tensions, high inflation, and policy uncertainty, is estimated to have limited growth to 0.4% this fiscal year, a 1.6 percentage-point downward revision from January. The government has, meanwhile, put the current year’s GDP growth rate at 0.3%.

“Agriculture output seems likely to have contracted for the first time in two decades. Economic recovery in the next two fiscal years is expected to be anaemic, with the growth of 2% and 3%, respectively, as there is limited fiscal room for the government to support recovery from flood-related damages,” the World Bank said in the report.