World Bank forecast Pakistan’s economic growth to slow further to two percent during the current year. This will mark a drop of two percentage points from its June 2022 estimates, according to the World Bank’s Global Economic Prospects report. The report said that Pakistan’s economic output was not only declining itself but also bringing down the regional growth rate as well. Forecasting Pakistan’s GDP growth rate to improve to 3.2 per cent in 2024, the report said, “Policy uncertainty further complicates the economic outlook” of Pakistan.
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This pace reflects still robust growth in India, Maldives, and Nepal, offsetting the effects of the floods in Pakistan and the economic and political crises in Afghanistan and Sri Lanka. The deteriorating global environment, however, will weigh on investment in the region,” the report said pointing to a “sharp, long-lasting slowdown” with the global growth expected at 1.7 per cent this year.
Devastating Floods, Biggest Reason:
Floods in Pakistan in July last year was cited as the main reason for the faltering economic situation in the country by the World Bank. The report also cited devastating floods in 2022 as a reason for the precarious economic situation in the country. Floods deluged almost one-third of Pakistan and directly impacted about 15 percent of the country’s population. “Recovery and reconstruction needs are expected to be 1.6 times the FY2022-23 national development budget,” the report said.
Cost of food items touches sky:
In Pakistan, soaring prices of basic food items have been burning hole in the pockets of people. Wheat, which is an essential staple food of Pakistanis, is barely in reach for many locals. Its prices have surged over 57 per cent, while the cost of wheat flour also saw an increase of 41 per cent, the Pakistan Bureau of Statistics said.
Pakistan’s forex reserves hit new low:
Pakistan’s forex reserves have hit a new low of USD 4.6 billion that would be barely adequate to pay for foreign bills for three weeks. Analysts have put the country’s need for relief at USD 33 billion. The shortage of dollars has been drastically hurting the economy and diverting remittances from the legal banking channel to the grey market.