Gloomy outlook
It is hardly a flattering picture: our country’s macroeconomic conditions have worsened over the years
It is hardly a flattering picture: our country’s macroeconomic conditions have worsened over the past year, exposing our overreliance on foreign loans that can only spark massive repayment problems in the not too distant future. To be sure, the World Bank’s Pakistan Development Update is an indictment of our economic excesses and conduct. Much of the wrongdoing has been traced to our failure to put in place proper and effective tax measures. Despite that, not all the Washington-based lender’s projections appear gloomy. Pakistan’s GDP growth rate will be 5.5 per cent and 5.8pc for the fiscal years 2017-18 and 2018-19. Of course there is a catch. Such a growth rate can only be ensured by lower political and security risks and slightly higher oil prices.
It is true, as observed by the World Bank country director, that Pakistan will need to continue with its economic reforms and pursue policies that make the country compete better in global markets. Some decent growth is expected in the industrial and services sectors but the agriculture sector is likely to remain in a rut.
Current account imbalances are wide enough to become unsustainable in the absence of timely corrective policy measures. It is estimated to fall to 4pc of GDP in 2017-18 against 4.1pc in the last fiscal year. It is possible that FDI may rise owing largely to CPEC but capital and financial flows are not just not expected to finance the current account deficit. Inflation is likely to grow to six per cent. Pakistan, according to the World Bank’s projections, will miss all key macro-indicators targets set for this fiscal year, notably fiscal deficit, current account deficit and annual economic growth rate. What is needed is an appropriate policy response that corrects imbalances and increases buffers strong enough to absorb future shocks, reduce risks and support growth.
Published in The Express Tribune, November 11th, 2017.
It is true, as observed by the World Bank country director, that Pakistan will need to continue with its economic reforms and pursue policies that make the country compete better in global markets. Some decent growth is expected in the industrial and services sectors but the agriculture sector is likely to remain in a rut.
Current account imbalances are wide enough to become unsustainable in the absence of timely corrective policy measures. It is estimated to fall to 4pc of GDP in 2017-18 against 4.1pc in the last fiscal year. It is possible that FDI may rise owing largely to CPEC but capital and financial flows are not just not expected to finance the current account deficit. Inflation is likely to grow to six per cent. Pakistan, according to the World Bank’s projections, will miss all key macro-indicators targets set for this fiscal year, notably fiscal deficit, current account deficit and annual economic growth rate. What is needed is an appropriate policy response that corrects imbalances and increases buffers strong enough to absorb future shocks, reduce risks and support growth.
Published in The Express Tribune, November 11th, 2017.