Despite Covid-19, Pak GDP to grow by 2.0pc: ADB

ISLAMABAD: With the forecast of achieving GDP growth of 2 percent for the outgoing fiscal, the Asian Development Bank (ADB) has warned that Pakistan’s economic outlook was subject to downside risks depending on persistent containment measures for providing vaccination to eligible population.

“However, the economic outlook is subject to downside risks, depending on persistent containment measures and success in achieving the vaccination target of 70pc of the eligible population by the end of December 2021," the ADB stated in its flagship publication titled Asian Development Outlook (ADO) 2021 released on Wednesday.

The ADB further stated that despite low-interest rates and, early in the fiscal year, further electricity tariff adjustments and food supply interruptions, headline inflation is projected to slow to 8.7pc in FY2021.

This partly reflects the government subsidies for wheat and sugar imports, its careful monitoring of prices for essential commodities, and improved food supply later in the fiscal year, said the ADB in its report.

At the onset of the pandemic, the government suspended its fiscal consolidation measures under the IMF-supported stabilization program. Since then, it has committed to reviving the program in FY2021 and aims to strike a balance between fiscal sustainability over the long run and immediate support for economic recovery

The GDP is forecast to grow by 2.0pc in FY2021 as easing COVID-19 restrictions foster broad recovery. Assuming successful vaccine rollout and the implementation of economic reform under a stabilization program with the International Monetary Fund (IMF), the GDP is expected to grow by 4.0pc in FY2022 as consumption strengthens and investor confidence improves.