World Bank cuts Pakistan’s GDP growth forecast to 2pc in FY-23

The World Bank on Thursday projected a growth rate of 2 per cent for the Pakistani economy for the fiscal year 2022-23, a drop of 2 per cent from its previous projections in April and June 2022.

In its report, the global agency raised the projection for Pakistan to 3.2% for FY23-24.

“The slower growth will reflect damages and disruptions caused by catastrophic floods, a tight monetary stance, high inflation, and a less conducive global environment,” the bank said in a statement. “Recovery will be gradual, with real GDP growth projected to reach 3.2 percent in fiscal year 2024.”

The World Bank said poverty in the hardest-hit regions would likely worsen due to the recent flooding.

“Preliminary estimates suggest that – without decisive relief and recovery efforts to help the poor – the national poverty rate may increase by 2.5 to 4 percentage points, pushing between 5.8 and 9 million people into poverty,” the statement said.

The World Bank also projected the average growth for the South Asian region to 5.8% this year – a downward revision of 1 percentage point from the forecast made in June. This follows growth of 7.8% in 2021, when most countries were rebounding from the pandemic slump.

“Beset with Sri Lanka’s economic crisis, Pakistan’s catastrophic floods, a global slowdown, and impacts of the war in Ukraine, South Asia faces an unprecedented combination of shocks on top of the lingering scars of the Covid-19 pandemic. Growth in the region is dampening,” says the World Bank in its twice-a-year update, underscoring the need for countries to build resilience.