UN survey projects upto 5.4 pct growth in Pakistan economy

ISLAMABAD: Pakistan’s economic growth outlook is projected to 5.2 to 5.4 per cent in next two years, forecasts the United Nations’ Economic and Social Survey of Asia and the Pacific 2017.

According to the survey, private consumption and public investment would drive the economy, supported by improved security conditions and ongoing infrastructure projects under the China-Pakistan Economic Corridor (CPEC).

Increased capital inflows from China to finance projects under CPEC have helped generate foreign exchange receipts, although imports of transport and construction-related items also increased, the survey says.

CPEC has helped attract more foreign investment as private investment was stronger in Pakistan, according to the survey.

The large-scale manufacturing sector should benefit from greater energy security and a notable cut in gas prices for industrial use. The agriculture sector is likely to improve, with better production of cotton, sugarcane and maize crops, the survey notes.

A rebound in global oil prices and an upward adjustment in domestic petrol prices would push up inflation during the fiscal year 2017-18 from 5pc to 5.5pc, which is still within the official target of 6pc.

According to the survey in the medium-term, energy shortages would continue to haunt the country with below-potential growth. The energy sector reforms would need to further reduce subsidies, tackle the accumulation of arrears and improve technical efficiency, the survey advises.

The survey also recommended addressing governance to improve the tax morale of taxpayers, the incentives to operate in the formal sector and the level of compliance of tax officials with relevant laws.