ISLAMABAD: Pakistan’s Economic Growth is gradually improving, thanks to reforms and stability in macroeconomic conditions, according to the recent assessment by the Asian Development Bank (ADB).
According to the report, however, economic performance has started showing signs of recovery owing to better fiscal discipline, inflation control and improved position on external front. Economic growth is stated to have gained momentum as compared to past few years, suggesting gradual progress towards stabilization.
In its projections for Pakistan, ADB has estimated 3.5% GDP growth in the current fiscal year while 4.5% in the next fiscal year, mainly due to recovery in industrial, construction and service sectors.
As per the observations of the ADB, the price fluctuation for commodities around the world remains a source of danger for the stability of domestic prices and external accounts, especially because of the instability in the oil and gas markets.
The ADB also stated that tensions in specific regions like the Middle East may add extra burden on imports and inflation.
From a policy perspective, the ABD highlighted the need to sustain efforts for reforms, budgetary discipline, and responsible monetary policies to ensure macroeconomic stability.
The report stated that private sector investments will continue to be significant in the medium term especially from growth in the export sector, manufacturing and other productive sectors. Consistency in governance and policy, according to the report, would be crucial in ensuring investor confidence.
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Inflation reduction might allow the monetary policy to take a relatively flexible position on account of continued declines in inflation. This flexibility could be key to supporting economic growth.
On balance, the ADB considered the Pakistani economic outlook “cautiously improving” given the fact that the economy was recovering, but with downside risks owing to external and inflation factors.”
