The Asian Development Bank (ADB) has forecasted that Pakistan’s economic growth will “recover slightly” in fiscal year 2022-23 (FY23) as a result of structural reforms.
In a report released on Thursday, the ADB stated that Pakistan’s GDP growth was expected to be moderate in the next financial year, due to fiscal tightening measures to manage growing demand pressures and contain external and fiscal imbalances.
The Asian Development Bank (ADB) has announced a slight revision to its inflationary forecast for the next financial year, 2022. The bank has also said that there will be a more substantial revision for the year after that, 2023. The reason for this is rising food and energy prices internationally, as well as the recent government hike in energy tariffs and removal of subsidies in the oil and power sectors in Pakistan. This is all part of the International Monetary Fund (IMF) agreement.
The report noted that headline inflation is at double-digit levels in most of the Caucasus and Central Asia, in Mongolia in East Asia, Pakistan and Sri Lanka in South Asia, and Lao People’s Democratic Republic and Myanmar in Southeast Asia. In addition, inflation in India was at seven per cent, higher than its central bank’s target of 2-6pc, the report added.
It stated, however, that “inflation in the rest of developing Asia’s large economies remain manageable. So for the region as a whole, inflation remains moderate on average and much lower than elsewhere in the world.”
The South Asian inflation forecast was revised to 7.8 percent for 2022 and 6.6 percent for 2023 due to increased prices of fuel, food, and other commodities in the international market and domestic factors in some countries.
The supplement report revised the growth forecast for developing Asia downwards from 5.2 percent to 4.6 percent for 2022 and from 5.3 percent to 5.2 percent for 2023, due to “worsened economic prospects because of Russia’s continued invasion of Ukraine, more aggressive monetary tightening in advanced economies and Covid-19 lockdowns” in China.
Although the crisis brought about by Covid-19 has eased in much of developing Asia, the economic consequences of Russia’s invasion of Ukraine have had the opposite effect, exacerbating problems in the region. Global commodity prices have risen sharply as a result of supply disruptions and sanctions against the Russian Federation, and this has led to inflationary pressures in many of the economies in the region.
The report noted that risks to developing Asia’s economic wellbeing were still high and mostly connected to outside forces. These dangers included a slowdown in global growth, more forceful central bank policy, increased prices and shortages due to the war in Ukraine, and higher food prices.