Islamabad, Apr 8 (UNI) The World Bank in its latest report has projected that the Pakistan's economic growth to go down by 3.4 per cent in the fiscal year 2018-19 and will further decelerate to 2.7 per cent in 2019-2020 as fiscal and monetary policies are tightened to address macroeconomic imbalances.
The latest edition "South Asia Economic Focus, Exports Wanted”, the World Bank cited macroeconomic imbalances, reflected in large fiscal and current account deficits, as the reason behind the projected slowdown in the GDP growth.
The report stated " In Pakistan, external account pressure reduced international reserves to USD 6.6 billion (1.3 months of goods and services import coverage) by mid-January 2019. With short-term financing from the Kingdom of Saudi Arabia, the United Arab Emirates and China, international reserves increased to USD 10.5 billion (2.0 months of goods and services import coverage) at the end of March. Meanwhile, the government continues to negotiate a support package with the International Monetary Fund, The News International reported.
“The current account deficit continued to widen but stabilized over the course of last year and it stood at 5.2 per cent of GDP in the fourth quarter of 2018. The current account deficit reached 8.8 USD billion (3.3 per cent of GDP) at the end of February 2019, compared to 11.4 USD billion (3.7 per cent of GDP) the year before.” It adds further.
Furthermore, the report states that the foremost inflation escalated in 2018 owing to the currency pressure that resulted in the surge in expense of final and intermediate goods. “It reached 8.3 percent (year over year) in December of last year, the highest value since January 2015... Consumer prices increased despite a strong decline in food prices,” it adds.
“It is entirely possible for Pakistan to transform its regulatory environment and reduce the cost of doing business. On the revenue front, reforms to improve tax administration and widen the tax base are critical.ver the adjustment period and beyond, actions outlined in the recently announced Ehsaas Program can protect the poor and vulnerable through social safety nets and safeguarding public spending on health and education,” World Bank goes on to state.
Hans Timmer, World Bank Chief Economist for the South Asian Region said “There’s no single solution that can unleash South Asia’s export potential and policymakers need to implement an ambitious range of reforms that can turn the region into the world’s next export powerhouse. Efforts should include trade liberalization, spurring entrepreneurship, and equipping citizens with the skills they need to compete on the global market. It would be good to be creative and relentless in all these efforts”.