ISLAMABAD: Pakistan’s growth forecast has been reduced for the next two year by two global lending agencies prophesying a prolonged downslide in economic outlook.
The projections came during a videolink meeting of the World Bank’s Country Director Patchamuthu Illangovan, habih Ali Mohib, programme leader and Amjad Zafar Khan, task team leader of Pandemic Response Effectiveness Project (PREP) with a group of journalists on Friday.
“We are revising our real GDP growth projection to 1.1 per cent of GDP, from an earlier projection of 2.4pc for FY20” said Shabih Ali Mohib, programme leader and lead economist of the World Bank, during a video link press briefing.
The revised projections come on the heels of Moody’s forecast. The slowdown is driven by services and the manufacturing sectors. The bank’s revised growth projection is 0.9pc, sharply down from 3pc for 2021.
The WB team said the impact of Covid-19 pandemic is expected to persist for another six months. The services sector constitutes 60pc of the economy he said, and is at the forefront of the impact from the lockdowns and the sharp reduction in imports. After this, manufacturing, which constitutes 20pc of the economy, is also bearing the brunt. The disruption in these two sectors will lead to a steep fall in economic activities, he said.
“We expect the impact to hit by last quarter of this fiscal year and the first quarter of next fiscal year” the programme leader said, meaning the months from April through August are set to see a sharp slump in the pace of economic activity, as per the World Bank’s projections.
The Asian Development Bank (ADB) was more restrained in its recent assessment, maintaining, “Economic growth in Pakistan is expected to slow to 2.6pc this year due to ongoing stabilisation efforts, slower growth in agriculture and the impact of the Covid-19 outbreak, before recovering to 3.2pc in 2021,” the Manila based lending agency said in its latest annual flagship economic publication, Asian Development Outlook 2020.
“Although Pakistan’s economy is in better shape than before, the nation needs to work together to tackle the new challenges posed by Covid-19 —including uncertain short term growth prospects — and its related socioeconomic repercussions. The government’s emergency package and extensive use of Ehsaas will be vital to blunting the detrimental impacts of the pandemic, particularly on the poor and vulnerable” ADB Country Director for Pakistan Xiaohong Yang said.
The ADB also forecasts inflation to ease to 11.5pc as the monthly average for the current fiscal year by June, with the downward glidepath to continue next year as well as it falls to 8.3pc next year.
The World Bank Group has approved $200m for Pakistan and it is further rolling out a $14bn fast-track package to strengthen the Covid-19 response in developing countries and shorten the time to recovery.
