The Asian Development Bank or ADB revealed about the possible decline in the GDP growth rate of Pakistan this year.
ADB forecasted that the GDP growth rate of Pakistan may decelerate to 3.9% in FY2019. However, it would follow the pronounced widening of the country’s balance of payments deficit last year.
Asian Development Outlook (ADO) 2019 mentioned that the GDP growth rate of Pakistan may drop to 3.9% in FY2019 as “macroeconomic challenges continue and despite steps to tighten fiscal and monetary policies to rein in high and unsustainable twin deficits.”
“For FY2018, ended 30 June 2018, the estimated GDP growth rate [was] revised downward from earlier 5.8% to 5.2%. Growth therefore slowed from 5.4% a year earlier. The growth decelerated despite revived agriculture. The expansionary fiscal policy markedly widened the budget and current account deficits and drained foreign exchange,” the report observed.
The report further added that inflation is expected to rise sharply to average 7.5% in Fiscal Year 2019, driven up by continued heavy government borrowing from the central bank, hikes to domestic gas and electricity tariffs, further increases in regulatory duties on luxury imports, and the lagged impact of currency depreciation by more than 10.7% since July 2018. Inflation will remain elevated at 7.0% in Fiscal Year 2020, it added.