ADB projects Pakistan’s growth at 2.8%, stresses need for robust economic reform implementation

ISLAMABAD: The Asian Development Bank (ADB) said on Wednesday Pakistan’s economic growth witnessed a rebound in the last fiscal year to 2.4% and could surge up to 2.8% in the ongoing financial year, though any sustainable improvement was contingent on continued implementation of robust economic reforms.

According to the ADB’s Asian Development Outlook September 2024, an update to its flagship economic publication, Pakistan’s financial recovery was supported by higher domestic consumption from increased agriculture income and workers’ remittances.

It added that adhering to the country’s economic reform program would be critical to strengthening macroeconomic stability and the continued recovery of growth, though the downside risks remained.

“Pakistan’s economic prospects are closely tied to the steadfast and consistent implementation of policy reforms to stabilize the economy and rebuild fiscal and external buffers,” ADB Country Director for Pakistan Yong Ye said in a statement that also mentioned the projected improvement in the country’s gross domestic product.

“It is imperative that Pakistan continues to consolidate public finances, expand social spending and protection, reduce fiscal risks from state-owned enterprises, and improve the business environment to encourage growth led by the private sector,” he continued.

The ADB said the implementation of the economic adjustment program in the ongoing fiscal year was expected to support private investment that needed more favorable macroeconomic conditions, including easier access to foreign exchange, which would also benefit manufacturing and services.

However, it maintained agriculture was projected to remain slow.

The ADB also acknowledged the reduction in headline inflation that it attributed to a decline in food price inflation due to an increase in agricultural production.

It noted that a well-regulated monetary policy could keep inflation to about 15%.