World Bank projects -1pc GDP growth for Pakistan in 2020-21

ISLAMABAD: Contrary to the positive projection of GDP growth rate of 2.3 percent by Pakistan’s economic managers, the World Bank (WB) has projected negative -1 percent GDP growth for Pakistan in upcoming fiscal year 2020-21. According to Global Economic Prospective Report released by the World Bank stated that Pakistan’s growth rate would remain negative 1 percent in next fiscal year 2020-21. The WB has revised its projection for GDP growth rate for Pakistan for three years as the growth rate for 2018-19 was revised downward to negative 0.1 percent and the growth rate for 2019-20 was slashed down to negative 0.3 percent. For next fiscal year, the WB projected negative growth rate of 1 percent for 2020-21. Pakistan’s GDP growth nosedived to negative 0.38 percent for outgoing fiscal year, calculated by National Accounts Committee that is going to be released through Economic Survey for 2019-20 on coming Thursday. The government has projected GDP growth rate at positive 2.3 percent for next budget 2020-21.

The WB states that Pakistan has decelerated in response to monetary policy intended to restore domestic and external balances. Policy adjustments to address macroeconomic imbalances in Pakistan also weighed on aggregate growth in this group.

In Pakistan, growth decelerated to an estimated 3.3 percent in FY2018/19, reflecting a broad-based weakening in domestic demand. Significant depreciation of the Pakistani rupee (the nominal e9ective exchange rate depreciated about 20 percent over the past year) resulted in inflationary pressures (SBP 2019).

Monetary policy tightening in response to elevated inflation restricted access to credit and government retrenched, curtailing public investment, to deal with large twin deficits and low international reserves.

Progress in fiscal consolidation has broadly weakened. Pakistan’s budget deficit rose more sharply than expected. Contributing factors were a shortfall in revenue collection, combined with a sizable increase in interest payments, the report added.

“Political instability seems to be a more severe in India and Pakistan than in others” the report maintained.