World Bank projects negative 1% GDP growth for Pakistan in 2020-21

ISLAMABAD: The World Bank has projected a negative -1% GDP growth for Pakistan in the upcoming fiscal year 2020-21 despite a positive projection of GDP growth rate of 2.3% by the country’s economic managers, reported The News.

According to the Global Economic Prospects Report released by the World Bank, Pakistan’s growth rate would remain negative 1% in the next fiscal year 2020-21. The WB has revised its projection for GDP growth rate for Pakistan for three years as the growth rate for 2018-19 was revised downward to negative 0.1% and the growth rate for 2019-20 was slashed down to negative 0.3%.

For the next fiscal year, the World Bank has projected a negative growth rate of 1% for 2020-21.

Pakistan’s GDP growth nosedived to negative 0.38% for the outgoing fiscal year, calculated by National Accounts Committee that is going to be released through Economic Survey for 2019-20 on coming Thursday. The government has projected a GDP growth rate at positive 2.3% for next budget 2020-21.

The World Bank has stated that Pakistan has decelerated in response to a monetary policy intended to restore domestic and external balances. Policy adjustments to address macroeconomic imbalances in Pakistan also weighed on aggregate growth in this group.

In Pakistan, growth decelerated to an estimated 3.3% in FY2018/19, reflecting a broad-based weakening in domestic demand. The significant depreciation of the Pakistani rupee (the nominal exchange rate depreciated about 20% over the past year) resulted in inflationary pressures.

Monetary policy tightening in response to elevated inflation restricted access to credit and government retrenched, curtailing public investment, to deal with large twin deficits and low international reserves.

Progress in fiscal consolidation has broadly weakened. Pakistan’s budget deficit rose more sharply than expected. Contributing factors were a shortfall in revenue collection, combined with a sizable increase in interest payments, the report added. “Political instability seems to be a more severe in India and Pakistan than in others” the report maintained. 

Originally published in The News