WB’s growth forecast

Pakistan’s economic growth prospects for the ongoing fiscal year remain abysmally low, with a new World Bank report estimating about 1.8% increase in GDP during the ongoing fiscal year. Even though most experts predict good news will eventually come from talks with the IMF regarding a new assistance programme, the lack of political stability is enough to scare off most investors. Early signs of differences in the coalition government and the fact that the largest single party is essentially in the opposition have financiers concerned about the security of their investments. A new wave of terrorist violence may also scare off some investors.

On the ground, investor hesitancy is also making it difficult for millions of Pakistanis to find gainful employment. But the biggest problems are still massive government debt, low revenue and inefficiency. With the right policies and investments, Pakistan could overcome these issues and build a stronger and more prosperous economy for the future, but time and again, we have seen lack of resolve to take unpopular but necessary decisions. The hope was that a strong new government could have changed this precedent, but voters had different priorities. This is also why policymakers still feel hamstrung, as they can’t risk letting inflation rise again, especially when the working poor continue dropping into poverty, while companies face supply chain concerns due to real and artificial import restrictions.

The World Bank report says poverty has risen by about 4.5%, as millions of people fell below the poverty line. This is being propelled up by inflation, which is expected to hover around an unmanageably high 26% at the end of the current fiscal year. And while Pakistan is out of the path of an economic crisis in the short term, without a clear path to sustain high economic growth and resolve the exchequer’s woes, we are only delaying the inevitable.

Published in The Express Tribune, April 4^th, 2024.

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