Islamabad: The Asian Development Bank has said that Pakistan’s economic outlook remains uncertain, as political instability would remain a key risk to the sustainability of stabilisation and reform efforts, according to a media report.
The Manila-based lending agency in its ‘Asian Development Outlook’ said potential supply chain disruptions from the escalation of the conflict in the Middle East would weigh on the economy, the Dawn newspaper reported.
It said if reforms are implemented, growth is forecast to restart gradually this fiscal year and improve slightly next year.
On the external front, potential supply chain disruptions from the escalation of the conflict in the Middle East would weigh on the economy. With Pakistan’s large external financing requirements and weak external buffers, disbursement from multilateral and bilateral partners remains crucial. However, these inflows could be hampered by lapses in policy implementation, ADB said in its outlook.
Further IMF support for a medium-term reform agenda would considerably improve the market sentiment and catalyse affordable external financing from other sources, ADB said.
The ADB also said that Pakistan’s growth is projected to remain subdued in FY2024 and pick up in FY2025, provided economic reforms take effect. Real GDP is projected to grow by 1.9 per cent in FY2024, driven by a rebound in private sector investment linked to progress on reform measures and transition to a new and more stable government.
Pakistan’s economy shrank as floods, political uncertainty, and disrupted external support caused public investment to plunge and private investment and industry to contract. Inflation reached a five-decade high as supply disruption and currency depreciation propelled increases in food and energy prices, ADB said.
