Pakistan’s economy is expected to grow by just 1.8% in the current fiscal year, which ends in June 2024, according to a Tuesday World Bank (WB) projection. The WB emphasized the need for structural reforms, as inflationary pressures have forced over 40% of the population below the poverty line.
The modest economic recovery in recent months is attributed to strict monetary and fiscal policies, ongoing import control measures to safeguard limited foreign reserves, and subdued economic activity amidst low confidence levels, according to the World Bank’s most recent “Pakistan Development Update: Fiscal Impact of Federal State-Owned Enterprises.”
“To lessen uncertainty and regain confidence, a strategy for economic transformation that is well-articulated, audacious, and credible is needed. There are still significant legislative barriers to sustainable economic growth, and the risks are still very high. buffers for policies to handle shocks remain depleted, with high levels of debt and tightly constrained foreign exchange reserves,” the WB report said.
The report said under the current policy settings, and unless a major structural reform programme was durably implemented, growth was expected to remain muted amid continued very low investment, persistent external imbalances (likely necessitating continued import and capital management measures), distortionary fiscal policies, and a large state presence in the economy.
The multilateral donor said Pakistan’s economy stabilised with improved economic management and new external inflows, while a sustained recovery, with improved growth prospects, and poverty reduction would remain a challenge.
