World Bank warns of sluggish growth, high inflation

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Projecting a persisting mix of sluggish growth rate and high inflationary trends with significant downside risks, the World Bank on Tuesday advocated Pakistan for a sharp fiscal adjustment of about 4pc of GDP and decisive implementation of broad-based reforms committed to the IMF to get out of the budgetary and macroeconomic quagmire.
“Predicated on the robust implementation of the IMF Standby Arrangement (SBA), new external financing and continued fiscal restraint, real GDP growth is projected to recover to 1.7pc in FY24 and 2.4pc in FY25”, said the World Bank’s latest “Pakistan Development Update: Restoring Fiscal Sust­ainability” released on Tuesday.
It estimated the inflation rate at 26.5 per cent for the current fiscal year and 17 per cent for FY25. The WB officials in Islamabad said the massive depreciation, high exchange rates and resultant heavy bank borrowing to finance record fiscal deficits and debt servicing fuelled the spiralling multi-decade high inflation rates.
Consequently, more than 12.5 million people arefalled below the international poverty line ($3.65 per day) from the vulnerable stage or 39.4 per cent of the population under the poverty line FY23 — down from 34.2 per cent in FY22.

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