ADB expects stabilisation of Pak economy this year

MANILA: The Asian Development Bank (ADB) expects stabilisation of Pakistan’s economy in current fiscal year while predicting slower growth than expected for developing nations of Asia.

In its Asian Development Outlook Supplement, the Manila-based lender assesses slower growth in Asia this year and next citing weakening domestic investment due to external factors such as the US-China trade war for its 5.2 per cent expansion forecast.

The ADB has revised its initial growth forecast of 5.7 per cent for 2019 and 5.6 per cent for 2020 which it subsequently trimmed down last September to 5.4 per cent and 5.5 per cent, respectively, for developing Asia an ADB region that groups 45 member economies, including China and India.

The report says China’s economic growth is projected to slow to 6.1 per cent this year and 5.8 per cent in 2020 from actual growth of 6.6 per cent in 2018. The report expects stabilisation in Pakistan’s economy this year. India’s growth forecast is also reduced to 5.1 per cent for this year from the earlier projection of 6.5 per cent last September.

Also consumption was affected by slow job growth and rural distress aggravated by poor harvest. Policy support will help growth recover to 6.5 per cent in 2020, it added. The main risks to the outlook are a surprisingly abrupt slump in domestic consumption and any worsening of the global growth slowdown or trade tensions, the report said about Japan.

Inflation in developing Asia, meanwhile, is projected to go up to 2.8 per cent this year and 3.1 per cent next year from the September forecast of 2.7 per cent this year and next. The inflation rate in Pakistan in first quarter of the current fiscal year remained at 10 per cent.

Meanwhile, the ADB announced its plan to invest $2 billion in energy sector during the coming three years. This was stated by a high-level ADB team, headed by Director General for Central and West Asia Department Werner Liepach, which met Power Minister Omar Ayub Khan and Special Assistant to Prime Minister on Petroleum Nadeem Babar in Islamabad on Wednesday.

Country Director ADB in Pakistan Ms Xiaohong Yang was also present during the meeting, which took stock of the ADB-funded projects in energy sector. It was decided that a comprehensive portfolio review meeting will be held by the end of this month between Power Division and the ADB to steer the projects to their logical culmination.

It was also agreed that all efforts by both sides will be made to ensure maximum transparency during the execution of the projects. During the meeting, the ADB showed interest in facilitating technical studies for the gas storage facility in Pakistan. During later part, the ADB can also consider financing the project.

The ADB team was apprised of approval of new renewable energy policy which will be placed before the Council of Common Interests (CCI) in its scheduled meeting by the end of this month.

The team was briefed on various steps taken by the Power Division to boost the efficiency of the system and campaign against power theft.

The ADB team expressed satisfaction over the steps taken by the Power Division for the growth of energy sector.