{"id":78251,"date":"2024-04-02T10:21:05","date_gmt":"2024-04-02T10:21:05","guid":{"rendered":"https:\/\/pakistaninewspaperlist.com\/news\/world-bank-expects-economic-activity-in-pakistan-to-remain-subdued-in-fy24\/"},"modified":"2024-04-02T10:21:05","modified_gmt":"2024-04-02T10:21:05","slug":"world-bank-expects-economic-activity-in-pakistan-to-remain-subdued-in-fy24","status":"publish","type":"post","link":"https:\/\/pakistaninewspaperlist.com\/news\/world-bank-expects-economic-activity-in-pakistan-to-remain-subdued-in-fy24\/","title":{"rendered":"World Bank expects economic activity in Pakistan \u2018to remain subdued\u2019 in FY24"},"content":{"rendered":"

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The World Bank on Tuesday said that it expected economic activity in the country to remain subdued in FY24 in the \u201cabsence of a credible and ambitious economic reform agenda\u201d which affected confidence and growth.<\/p>\n

\u201cPakistan is expected to continue facing foreign exchange liquidity issues due to the persistent trade deficit and limited access to external financing,\u201d said the World Bank\u2019s latest \u201cPakistan Development Update: Fiscal Impact of Federal State-Owned Enterprises\u201d report<\/a>.<\/p>\n

\u201cEven with the recent successful completion of the International Monetary Fund (IMF)\u2019s Stand-By Arrangement (SBA) and continued rollovers, reserves are projected to remain low,\u201d it said.<\/p>\n

The Bank warned that import management measures were expected to continue disturbing domestic supply chain, in addition to tight macroeconomic policies subduing the aggregate consumption and investment.<\/p>\n

\u201cEconomic activity is therefore expected to remain subdued with real gross domestic product (GDP) projected to grow at 1.8 per cent in Fiscal year (FY) 2024,\u201d it added.<\/p>\n

The bank estimated output growth to recover at an average of 2.5pc over the next two years as confidence improved \u201cremaining below potential in the medium term\u201d.<\/p>\n

Furthermore, the report said, \u201cInflation is projected to remain elevated at 26pc in FY24 due to higher domestic energy prices. With high base effects and lower projected global commodity prices, inflation is expected to moderate over the medium term.\u201d<\/p>\n

With regards to the current account deficit (CAD), the report said that due to lower domestic demand and continued import management measures, it was expected to remain low at 0.7pc of the GDP in the current fiscal year, adding expectations of it narrowing to 0.6pc of GDP in the next two years.<\/p>\n

The report pointed out that multiple factors posed risks to the the country\u2019s economic outlook, adding that Pakistan engaged in heavy domestic borrowing for fiscal financing, with a tax-to-GDP ratio of 10pc to the GDP, leading to exposure of the banking sector to risks.<\/p>\n

\u201cAdditional downside risks include growing policy uncertainties that could lead to weaker than expected business confidence, even more limited external financing, and therefore more pronounced macroeconomic vulnerabilities,\u201d it elaborated.<\/p>\n

Regarding reforms for the state-owned enterprises, the Bank said that \u201curgent\u201d reforms were necessary to reduce the growing fiscal risks. It said that the entities were consistently making losses since 2016, and the government was providing \u201csignificant financial support through subsidies, grants, loans, and guarantees\u201d which led to fiscal exposure.<\/p>\n

The report also stated that the country had \u201cmoved away from the brink of an economic crisis\u201d following the last minute IMF programme<\/a> Pakistan had managed to clinch in July 2023.<\/p>\n

\u201cSteadfast implementation of the programme \u2014 including through continued fiscal restraint, energy tariff adjustments, and the continued high policy rate \u2014 enabled new official external inflows early in the fiscal year, allowing a loosening of import management measures and some recovery in confidence,\u201d it said.<\/p>\n

However, the report cautioned that the nascent recovery had been inadequate in addressing poverty in the country as wages for unskilled labour were not at par with inflation.<\/p>\n

It estimated that poverty in the country had increased by 4.5 percentage points with ten million people at the risk of falling below the poverty line \u201cin face of shocks\u201d.<\/p>\n

Subsequently, it noted that rising food prices continued to negatively impact the poor households \u201cthat spend half their budgets on food, leading to significant inflation inequality across households.\u201d<\/p>\n<\/p><\/div>\n","protected":false},"excerpt":{"rendered":"

The World Bank on Tuesday said that it expected economic activity in the country to remain subdued in FY24 in the \u201cabsence of a credible and ambitious economic reform agenda\u201d which affected confidence and growth. \u201cPakistan is expected to continue facing foreign exchange liquidity issues due to the persistent trade deficit and limited access to 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