World Bank makes big cut to Pakistan’s GDP growth projection

ISLAMABAD – Predicting difficult times ahead, the World Bank revised Pakistan’s growth projections from 2 percent to 0.4 percent for the current fiscal year, citing tighter financial conditions and limited fiscal space among the primary reasons.

The bank, in its report Pakistan Development Update, warned the South Asian nation about serious dangers to its economic and debt viability projecting unexciting economic growth, with an average inflation rate of 29.5pc for the current fiscal year.

The global financial institution maintained that poverty is likely to increase to 37.2pc in the current fiscal year, pushing around 4 million people into poverty. WB linked soaring food prices to greater food insecurity in Pakistan, which spends a larger share of income on food.

It maintained that implementing macroeconomic and structural reforms agreed upon under the IMF programme is critical to restoring macro-stability, confidence, and averting a public debt crisis.

World Bank Director for Pakistan Najy Benhassine said the IMF programme is an anchor to staying on course for reforms, and added that this was not an easy time to write the Pakistan Development Update report.

The crisis hit the nation has lost access to global capital markets, which is now making it difficult to arrange even additional loans to revive the IMF bailout funds. The country of over 220 million is facing its worst economic crisis for months with an acute balance of payments crisis as negotiations with global lender remained uncertain since last year.

On other hand, the World Bank also lowered its 2023 regional growth forecast to 5.6 percent from 6.1 percent. It lowered its forecast for India’s economic growth.