ISLAMABAD: The World Bank on Tuesday slashed its growth forecast for Pakistan and the global economy, citing rising trade tensions, weak manufacturing activity, and growing financial stress in emerging markets this year.
Titled “Darkening Skies,” the report said that it expects the world economy to grow by 2.9 percent in 2019, down from the 3 percent it had forecast in June.
“In Pakistan, macroeconomic imbalances weigh in on the growth outlook. Pakistan is expected to face financing needs due to large current account and fiscal deficits combined with low international reserves,” the report said, adding that the “GDP growth is projected to decelerate to 3.7 percent in FY2018/19, with financial conditions tightening to help counter rising inflation and external vulnerabilities.”
According to the report, there were some signs of rising inflation pressure across South Asia, while Pakistan raised its rates in 2018 to counter the effects of currency depreciation, rising energy prices, and domestic capacity constraints.
“Pakistan’s fiscal deficit rose to 6.6 percent of GDP last year, well above the government’s target of 4.1 percent, as tax collection fell short of expectations,” the report said.
The report also cited an increase in external vulnerabilities in South Asia.
“Recent currency pressures have eroded Pakistan’s foreign exchange reserves significantly— they currently amount to only around two months of imports,” it added.
State-run Radio Pakistan quoted Information Minister Chaudhry Fawad Hussain when it reported on Wednesday that the government has set a target for achieving a seven percent growth rate besides alleviating poverty from the country.
World Bank cuts 2019 growth forecast for Pakistan
World Bank cuts 2019 growth forecast for Pakistan
- Country’s macroeconomic imbalances weigh in on outlook, report says
- Several other countries also feature in predictions for global economy which is set to grow by only 2.9% this year
