By Staff Reporter
ISLAMABAD: Pakistan’s economy grew 2.4 percent in the last fiscal year and is expected to expand 2.8 percent in the current financial year, the Asian Development Bank (ADB) said on Wednesday, but warned sustained growth hinges on continued economic reforms.
The ADB’s Asian Development Outlook September 2024 report credited higher domestic consumption, driven by increased agriculture income and workers’ remittances, for the rebound.
“Pakistan’s economic prospects are closely tied to the steadfast and consistent implementation of policy reforms to stabilize the economy and rebuild fiscal and external buffers,” ADB Country Director for Pakistan Yong Ye said in a statement.
The lender said adhering to the country’s economic reform program will be critical to strengthening macroeconomic stability and the continued recovery of growth, even as downside risks remain.
“It is imperative that Pakistan continues to consolidate public finances, expand social spending and protection, reduce fiscal risks from state-owned enterprises, and improve the business environment to encourage growth led by the private sector,” Ye said.
The ADB said the economic adjustment program is expected to support private investment, boosted by easier access to foreign exchange, benefiting manufacturing and services.
“To rebound, private investment would need more favorable macroeconomic conditions, including easier access to foreign exchange, which would also benefit manufacturing and services.” However, agriculture growth is projected to remain slow.
Headline inflation is seen easing due to decreased food price inflation, resulting from increased agricultural production. A well-regulated monetary policy is expected to keep inflation at around 15 percent.
Average headline inflation slowed to 23.4 percent in FY2024 from 29.2 percent in FY2023.
“Inflation remained elevated in the first half of FY2024 but subsided afterwards, particularly during the fourth quarter. This reduction was mainly attributed to a decline in food price inflation, which was driven by increased agricultural production,” the ADB said.
“Inflation is expected to ease further to 15 percent in FY2025 due to the implementation of a well-regulated monetary policy, reduced exchange rate volatility, and a stable outlook for international food prices.”
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