World Bank cuts Pakistan’s growth forecast to 2% after floods
The World Bank has estimated that Pakistan’s GDP growth will slow from 5% in FY2022 to around 2% in FY2023 following one of the most devastating floods in history. from the country. It also projected poverty to rise by 2 to 4.5pc while committing $2 billion in loans for flood-affected areas, The News International reported.
In the South Asia region, Pakistan’s macroeconomic projection remains the second worst after Sri Lanka, where GDP growth was expected to turn negative. “Without creating buffers on the internal and external fronts, South Asian economies will face challenges like Sri Lanka,” said Hans Timmer, the World Bank’s chief economist for South Asia, during the meeting. of a virtual press conference from Washington DC on the occasion of the launch of the World Bank. Fall 2022 economic outlook for South Asia on Thursday.
The World Bank forecast a massive downward revision of the GDP growth rate to 2% for Pakistan against an official projection of 5%, an increase in inflation to 23% against the target of 11.5%, a budget deficit of 6.9% of GDP against official estimates of 4.9% and primary deficit at -3% of GDP compared to the official surplus target of 0.2% of GDP for the financial year ongoing, provided Islamabad remains under the IMF’s existing Extended Financing Facility (EFF) arrangement, The News International reported. The World Bank has projected that poverty will increase by 2 to 4.5 percent, pushing 5.8 to 9 million people below the cruel clutches of Pakistan’s poverty line.
“The floods have heightened macroeconomic risks. Continued policy tightening has become more difficult due to the floods. The government will face challenges in implementing the planned fiscal consolidation, given the large relief needs and -the evolving flooding situation that could further reduce output and aggravate economic imbalances;political pressures that undermine the implementation of a coherent and prudent macroeconomic policy mix;unexpected deterioration in external conditions and the risks associated with large fiscal and external financing needs,” said the World Bank’s Pakistan. Development Update, launched here at the Bank’s office on Thursday, said. To manage these uncertainties, the WB suggested that the government adhere to sound economic management, while carefully targeting any new spending on the poor and maintaining progress on key structural reforms, including in the energy sector, reported The News International. (ANI)
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