Pakistan should adhere to IMF reforms: ADB

ISLAMABAD: The Asian Development Bank (ADB) on Wednesday said that Pakistan’s growth in the 2022-23 fiscal year was “weighed down by monetary policies to safeguard macroeconomic stability, pervasive inflation, and significant damage from flooding.”

In its latest report, July’s Asian Development Outlook (ADO), the ADB clarified that the projection for Pakistan in last month’s ADO assumed that the government would continue with reforms recommended by the International Monetary Fund under a new policy-support programme approved on July 12.

However, the ADB said that “Developing Asia” was on track to grow faster in 2023, as strong consumption and investment offset the impact of weak global demand.

In its update to the regional economic outlook, the ADB kept its 2023 growth forecast for developing Asia at 4.8%, but revised its estimate for next year to 4.7% from 4.8% in April, reflecting risks, including from Russia’s war on Ukraine.

Developing Asia consists of 46 economies in the Asia-Pacific and excludes Japan, Australia and New Zealand.

The ADB is maintaining its growth projections for sub-regions East Asia and South Asia, with China and India still expected to expand 5.0pc and 6.4pc this year, respectively, and 4.5pc and 6.7pc in 2024.

Meanwhile, it slightly trimmed its growth projections for Southeast Asia, now expected at 4.6pc this year and 4.9pc next year, down from 4.7pc and 5.0pc respectively. The ADB said this was mainly due to weaker global export demand.

An upside risk to the growth outlook of developing Asia is slower inflation, which has allowed most central banks in the region to hold off tightening, helping underpin domestic consumption.

The region’s inflation is forecast to slow to 3.6pc this year from its previous forecast of 4.2pc, with the rate expected to decelerate further to 3.4pc in 2024.