To close the week on a good note, here’s to sharing that the World Bank has been confident over the growth projection of Pakistan for the next 3 years as the GDP growth rate of the country has raised to 5.2% in 2017. Some of the primary reasons of revising its former estimation are vast cross-border infrastructure investment, transformations and restoration of investor trust.
In its flagship report which was released on Tuesday, World Bank stated:
“The uptick in activity was spurred by a combination of low commodity prices, rising infrastructure spending, and reforms that lifted domestic demand and improved the business climate”
GDP Growth Rate Forecast Improved from 4.5% to 5.2% in 2017
It is pertinent to mention that World Bank also augmented the GDP growth of Pakistan for 2018 and 2019. South Asia’s second largest economy is forecasted to accelerate to 5.5% and 5.8% in 2018 and 2019 respectively. It will reflect expansions in agriculture, energy, external demand and infrastructure.
As far as the prediction of last year (June 2016) is concerned, World Bank projected GDP growth rate to 4.5% in 2017 and 4.8% for 2018. The sole reasons for congested figures were unhealthy stock market, high unemployment ratio, weak security condition and political tensions between Pakistani parties. Moreover, there was a massive upsurge in oil prices and the export market was also dampened.
In a report which was titled ‘Global Economic Prospects: Weak Investment in Uncertain Times‘, World Bank said:
“The investment growth has recovered in a number of countries, including Pakistan. “However, investment growth remains below its long-term average in more than half of all commodity-importing countries”
Role of IMF in Lifting Pakistan’s Economy
International Monetary Fund (IMF) also played a crucial role in lifting country’s economy. They successfully extended fund facility program which was intended at supporting reforms and lessening fiscal susceptibilities. Additionally, this boosted the trust of both consumer and investor.
Under the World Bank’s development policy credits and IMF program, Pakistan applied several reforms like measures to simplify energy limitations, tax policies and administrative reforms. All these methods were undertaken to increase incomes and to firm up the independence of SBP to diminish exposures.
CPEC Playing a Positive Part Too
According to the bank, China-Pakistan Economic Corridor (CPEC) is also playing a major role towards GDP growth in Pakistan. Furthermore, it will also encourage investment in the medium-term besides improving the transportation and energy deficiencies. World Bank in its report stated:
“The appreciating trade-weighted real exchange rate weakened the export competitiveness in Pakistan and India. Lower energy import bills mitigated the negative impact of reduced exports and remittances on current account balances which, except for Bangladesh, mostly continued to be in the deficit”
In terms of growth, Afghanistan was declared as the weakest country in terms of GDP growth. The World Bank projected its growth at 1.2% in 2016. The report read:
“This is largely due to slowing domestic demand, deteriorating security, and drought which affected agriculture output. Resettlement of returning refugees from Pakistan further exerted fiscal pressure, constraining infrastructure investment”
CPEC is playing a positive role in the development of Pakistan along with some other factors. Do you agree with the statement?