ISLAMABAD – The World Bank has projected Pakistan’s economic growth at 5.5 percent for the next financial year (2017-18).
“Pakistan growth is expected to pick up to a 5.2 percent rate in fiscal 2017 (July 1, 2016 – June 30, 2017) and to 5.5 percent in the next fiscal year, reflecting an upturn in private investment, increased energy supply, and improved security”, according to the World Bank’s June 2017 Global Economic Prospects issued on Monday.
Pakistan’s estimated economic growth would be higher than global economic growth of 2.7 percent in year 2017. Global economic growth will strengthen to 2.7 percent in 2017 as a pickup in manufacturing and trade, rising market confidence, and stabilizing commodity prices allow growth to resume in commodity-exporting emerging market and developing economies.
Growth in South Asia is forecasted to pick up to 6.8 percent in 2017 and accelerate to 7.1 percent in 2018, reflecting a solid expansion of domestic demand and exports. India is expected to accelerate to 7.2 percent in fiscal 2017 (April 1, 2017 – March 31, 2018) and 7.5 percent in next fiscal year. Sri Lanka’s growth is forecast to accelerate to a 4.7 percent rate in 2017 and 5 percent in 2018.
The government of Pakistan has estimated economic growth at 6 percent for the upcoming financial year 2017-18.
In Pakistan, agricultural output rebounded following the end of a drought, while the successful completion of an IMF-supported program enhanced macroeconomic conditions and foreign direct investment (FDI). In Pakistan, favorable weather and increased cotton prices are supporting agricultural production, and the China-Pakistan Economic Corridor infrastructure project, as well as a stable macroeconomic environment, is contributing to an increase in private investment.
Pakistan’s fiscal deficit should narrow further, as a result of revenue-led fiscal consolidation. Inflation has remained benign, hovering below target in Bangladesh, Pakistan, and India.
Favorable weather (e.g., India, Pakistan) and lower oil prices have helped keep inflation low, and thereby made possible an accommodative monetary policy. Despite mixed progress with fiscal consolidation in the region, deficits generally declined.
Security concerns in some countries (e.g., Afghanistan, Pakistan) could also hold back investment and business confidence. For several countries in the region, increased political or geopolitical tensions could pose major obstacles to economic and financial activity (e.g., Afghanistan, India, Pakistan). Upcoming elections in Nepal (between 2017 and 2019), Bangladesh and Pakistan (in 2018), and India (in 2019) could be accompanied by heightened policy uncertainty, and election results could surprise financial markets. Contingent liabilities are building up, including from the debt of power utilities in Pakistan, the Word Bank’s report noted.