ADB enhances Pakistan’s growth forecast to 3.7%

Cuts growth estimates for Asia, says boom period almost over

ISLAMABAD: The Asian Development Bank (ADB) has enhanced Pakistan’s growth forecast for the year 2012 to 3.7% from 3.6% projected earlier. For Asia, the regional development bank scaled back 2012 and 2013 growth forecasts, saying that after years of rapid growth, the region must brace for a prolonged period of moderate expansion amidst an ongoing slump in global demand.

In its Asian Development Outlook 2012 update report, the bank predicted Pakistan’s growth at 3.7%, which was earlier predicted at 3.6% by the region’s outlook report released in April this year. It is pertinent to mention that the Asian Development Outlook and the Asian Development Outlook Update are ADB’s flagship economic reports, which analyse economic conditions and prospects in Asia and the Pacific, and are issued in April and October, respectively.

The report projected the same growth rate for Pakistan of 3.7% for 2013 against the prediction of 4% earlier, depicting a decrease in gross domestic product (GDP) growth rate of 0.4%. The report also scaled back 2012 and 2013 growth forecasts for India, down to 5.6% in 2012 from 6.5% in 2011. Chinese economy was forecasted to grow by 7.7% this year and 8.1% in 2013, a drop from the 9.3% posted in 2011.

For overall South Asia, the growth is estimated at 5.5% as compared to 6.2% in 2011. The report projected the region’s GDP growth dropping to 6.1% in 2012, and 6.7% in 2013, down significantly from 7.2% in 2011.

The report noted that the ongoing sovereign debt crisis in Europe and looming fiscal cliff in the United States could have disastrous spill-over to the rest of the world, particularly developing Asia. The projected slowdown was likely to ease price pressures, however, with inflation falling from 5.9% in 2011 to 4.2% for both 2012 and 2013, assuming there are no spikes in international food and fuel prices.

Published in The Express Tribune, October 4^th, 2012.