Bank cites ‘precarious economic situation, low foreign exchange reserves and large fiscal and current account deficits’ among the primary reasons.
Predicting a difficult year ahead for Pakistan, the World Bank has revised the country’s growth projections from 4 percent in June last year to 2 percent for the current fiscal year
citing “precarious economic situation, low foreign exchange reserves and large fiscal and current account deficits” among the primary reasons.
The bank, in its Global Economic Prospects report released on Tuesday, said last year’s catastrophic floods worsened the country’s economy,
mainly causing significant damage to agricultural production, which accounts for 23 percent of Pakistan’s gross domestic product (GDP) and provides employment to 37 percent of its working population.
“Policy uncertainty further complicates the economic outlook. The recent floods in Pakistan are estimated to have caused damage equivalent to about 4.8 percent of GDP,” the global bank said.
The projections for Pakistan are in line with the bank’s global outlook report, which forecasts a “sharp, long-lasting slowdown,
with global growth declining to 1.7 percent in 2023 from 3.0 percent expected just six months ago”. The slowdown in the region is “mainly due to weak growth in Pakistan”, the bank noted.
The South Asian region will see a slowdown in growth in the coming year, with projections for 2023 remaining at 5.5 percent, while showing minor improvement to 5.8 percent in 2024, it said.