The World Bank has projected Pakistan’s GDP growth rate at 1.7 percent during the fiscal year 2023-24 (FY24), a downward revision from its earlier estimate of 2 percent during the period. The bank, in its latest report ‘Pakistan Development Update: Restoring Fiscal Sustainability’ released on October 03, 2023, said that without a sharp fiscal adjustment and decisive implementation of broad-based reforms, Pakistan’s economy will remain vulnerable to domestic and external shocks. Predicated on the robust implementation of the IMF Stand-By Arrangement (SBA), new external financing, and continued fiscal restraint, real GDP growth is projected to recover to 1.7 percent in FY24 and 2.4 percent in FY25. Economic growth is therefore expected to remain below potential over the medium term with some improvements in investment and exports, said the bank.
Pakistan’s economy slowed sharply in FY23 with real GDP estimated to have contracted by 0.6 percent. According to the World Bank, the decline in economic activity reflects the cumulation of domestic and external shocks including the floods of 2022, government restrictions on imports and capital flows, domestic political uncertainty, surging world commodity prices, and tighter global financing
The previous fiscal year ended with significant pressure on domestic prices, fiscal and external accounts, and exchange rates, and a loss of investor confidence. The difficult economic conditions along with record-high energy and food prices, lower incomes, and the loss of crops and livestock due to the 2022 floods, have significantly increased poverty
The poverty headcount is estimated to have reached 39.4 percent in FY23, with 12.5 million more Pakistanis falling below the Lower-Middle Income Country poverty threshold (US$3.65/day 2017 PPP per capita) relative to 34.2 percent in FY22.To regain stability and establish a base for medium-term recovery, the report recommends reforms to drastically reduce tax exemptions and broaden the tax base through higher taxes on agriculture, property, and retailers; improve the quality of public expenditure by reducing distortive subsidies, improving the financial viability of the energy sector, and increasing private participation in state-owned enterprises; and strengthening management of public debt through better institutions and systems, and by developing a domestic debt market. http://rb.gy/ualuj
Source: IBP