A new Asian Development Bank report paints an extremely bright picture for the economies of South Asia — if not for Pakistan and Sri Lanka. Whereas the regional growth forecast for the region is 5.4% for the 2023 calendar year and 6.1% for 2024 — compared to 4.7% this year and 4.8% next year for all of Asia, the figures for South Asia would have been even higher if not for Sri Lanka’s negative growth and Pakistan’s flat-lining growth graph. Though India’s 6% to 7% growth estimates are carrying the region, those of Bangladesh and Maldives were also around 7%, and those of Nepal and Bhutan exceeded 4%. And while Sri Lanka is at least on the path to recovery, according to the ADB, Pakistan’s best-case scenario for 2024 is 1.9% growth, which is actually worse than the 2% projection from April, which was before the summer IMF bailout helped us avoid bankruptcy.
“Downside risks to the outlook remain exceptionally high,” the ADB report says after explaining how just getting the economy to a point where it is no longer considered a disaster will require “steadfast and consistent implementation of policy reforms” including all of the IMF’s harsh conditions. But that is not all. Pakistan will also have to ease import controls, which would bring another wave of devaluation and foreign exchange stress, and perhaps the biggest ask, a “smooth general election” to help restore confidence. But, given the limited range of policymaking space and even more limited choice of policymakers, even a clean election may not be enough to turn things around.
After all, these same policymakers are quick to claim that inflation is a global problem, while ignoring that their policy failures — across party lines — created a situation where inflation in Pakistan will exceed 29% this year, which is the highest in Asia — over twice that of second-placed Kazakhstan and almost four times as severe as India. Even next year, the projection is for 25% inflation, meaning that prices will have gone up by well over 50% in just two years.
Published in The Express Tribune, September 23rd, 2023.
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