The Asian Development Bank (ADB) has forecasted Pakistan GDP growth by two percent during 2021, subject to successful vaccine rollout and implementation of stabilization measures.
On Wednesday, ADB forecasted country’s GDP growth by two percent during the current year. “Assuming successful vaccine rollout and the implementation of economic reform under a stabilisation programme with the International Monetary Fund (IMF), GDP is expected to grow by 4 percent in FY2022 as consumption strengthens and investor confidence improves,” the ADB said in its flagship Asian Development Outlook (ADO) 2021.
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ADB Acting Country Director for Pakistan Cleo Kawawaki said that it was vital for Pakistan to continue to battle the pandemic by rapidly arranging vaccines and continuing with reforms to support economic growth, which includes, strengthening social protection and supporting the private sector.
“Improving access to finance for small and medium-sized enterprises is essential to unlocking business opportunities and stimulating new jobs. Continued macro-economic stability and increasing competitiveness are also key pillars under ADB’s Pakistan Country Partnership Strategy 2021-2025 that will support an inclusive and sustainable recovery.”
For FY2021, agriculture is expected to see slower growth mainly due to a sharply lower cotton harvest due to heavy rains, pest attacks, and continued contractions in cultivated areas of land.
According to the ADB, these two factors are successful vaccine rollout and implementation of stabilization measures.
It said, “The economy contracted in fiscal 2020 as COVID-19 restrictions and supply-chain disruption shrank industry and services. The downturn was worsened by currency depreciation and fiscal tightening. Growth is projected to rebound in the near term as restrictions ease.”
It added, “The pace of vaccine rollout and the fate of economic stabilization measures are key for restoring investor confidence. Measures to support the private sector, especially small and medium-sized enterprises, would support recovery.”
However, the State Bank of Pakistan, the central bank has maintained its policy rate at 7 percent to support the economic recovery. Investment is projected to strengthen as global sentiment improves and the stabilization program supported by the International Monetary Fund (IMF) progresses.