Contrary to all the rhetoric generated by Prime Minister Imran Khan and his advisers, the latest outlook issued by the Manila-based Asian Development Bank (ADB) notes that Pakistan will witness the slowest growth rate in South Asia of 2.8 percent for 2019/20. This will be slower than 3.4 percent for Afghanistan and 8 percent for Bangladesh.
“Given the need for the authorities to address sizable fiscal and external imbalances, the economy is expected to slow further, with GDP growth projected at 2.8 percent in FY2020. Fiscal adjustments are expected to suppress domestic demand, and demand contraction will keep growth in manufacturing subdued. However, agriculture is expected to recover from weather-induced contraction this year, with major incentives in the government’s agriculture support package included in the budget for FY2020.”
The ADB Country Director for Pakistan Xiaohong Yang noted that “the country needs to continue efforts to stabilise and protect the economy against external risks, rising global prices, current account deficit, rising debt servicing, and continued losses of public sector enterprise.”
Further, ADB noted, “Pakistan needs to press ahead with macroeconomic and structural reforms, revitalising public sector enterprises, improving revenue collection, energy and water security, and leveraging improved security and regional cooperation opportunities to secure the hard won gains and promote growth.”
Finally, “ADB projected the inflation to be markedly higher at 12 percent this fiscal year in anticipation of planned tariff hikes for domestic utilities, higher taxes, and especially the lagged impact of currency depreciation.”
Maybe it is time Pakistan’s leaders understood that Pakistan’s structural economic problems cannot be wished away and the economy will not turn around simply because the army is now part of the planning establishment.