ADB forecasts Pakistan’s economy to grow 4pc in FY22

ISLAMABAD: Pakistan’s economic growth is expected to reach 4 per cent in the financial year 2022 (FY22) as business activity resumes gradually in the second year into the pandemic, the Asian Development Bank (ADB) said in a report on Wednesday.

Pakistan’s economy is expected to continue recovering in FY2022, according to the Asian Development Outlook (ADO) 2021 Update. It is supported by stronger private investment, improving business activity, a steady vaccine rollout, and economic stimulus measures for FY2022.

Yet, significant uncertainty over the course of the pandemic clouds the economic outlook in Pakistan and worldwide.

“Pakistan’s economy is on the path to recovery, supported by promising growth in the industry and services sectors,” said ADB Country Director for Pakistan Yong Ye.

The report has forecast Pakistan’s inflation to slow to 7.5 pc in FY2022, unchanged from the projection it made in last year’s ADO. It has based the projection on food prices moderating with supply chain improvement and production increasing facilitated by the government’s Agriculture Transformation Plan.

Price rises for other goods are expected to moderate as well on the back of tax relief in the FY2022 budget.

For the past year, the report said the inflation declined to 8.9 pc.

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Food price inflation remained high due to supply chain disruptions, increased prices for wheat and sugarcane, and an extended wet monsoon.

Rising international oil prices boosted energy price inflation. Yet, inflation for other goods eased thanks to the appreciation of the Pakistani rupee and a postponement of planned hikes for electricity tariffs and domestic fuel prices.

Remittances are likely to remain elevated, supported by the Roshan Digital Accounts initiative, and will continue to narrow the current account deficit, the report added.