ADB’s economic outlook report predicts decrease in Pakistan’s inflation, GDP

ISLAMABAD: The Asian Development Bank (ADB) has released its Asian Development Outlook report for September 2023, shedding light on Pakistan’s economic trajectory. According to the report, inflationary pressures in the country are anticipated to persist in the short term, hovering around 29 percent.

However, a gradual decline to 25 percent is projected by the same time next year. Additionally, the report forecasts a GDP growth rate of 1.9 percent, revised downwards from 2 percent.

The forthcoming general elections in 2023-24 are expected to inject a boost of confidence into Pakistan’s economy, as per the report. The ADB has emphasized the crucial importance of implementing an Economic Adjustment Program by April 2024 to ensure macroeconomic stability and facilitate a gradual economic recovery.

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Yong Ye, ADB Country Director for Pakistan, highlighted the impact of rising global prices and sluggish economic growth as potential threats to Pakistan’s economy. He stressed that sustaining economic stability would hinge on continued policy reforms.

The ADB underlined the necessity for stringent fiscal discipline and advocated for a market-based exchange rate. The report also urged swift reforms within the energy sector and other government institutions.

However, it also sounded a note of caution, emphasizing significant downside risks to Pakistan’s economic outlook in FY24, stemming from potential global price shocks and a slowing global economy.

The report concluded by noting that despite efforts to implement an economic adjustment program, the persistent increase in energy tariffs and ongoing depreciation of the rupee would likely keep inflationary pressures elevated.