World Bank forecasts economic growth of Pakistan

[nadeemkhan110]

WASHINGTON - Pakistan gross domestic product growth will accelerate to 4.5 in the current fiscal year and to 4.8 percent in fiscal year 2016-17, said a World Bank report.

The report “Pakistan Development Update” said that the growth will be supported by strong services growth and a slight improvement in the industry sector. It also discussed the important improvements of the external sector in Pakistan over the past few years, noting that foreign exchange reserves have increased from precariously low levels to appropriate level given the size of Pakistan imports.

The current account deficit narrowed to $2.6 billion in FY2014-15 compared to $3.1 billion in the previous year, a result of record high remittances in the order of $18.7 billion. External financial inflows continued strong, although lower than in the previous year. As a result, the balance of payments was positive for the second year in a row.

World Bank Country Director for Pakistan Patchamuthu Illangovan says that there is an improvement in Pakistan overall economic environment. With macroeconomic stability largely restored, Pakistan can focus now on boosting development outcomes which were not where one would expect, given the country income level.

To improve the country competitiveness, it is extremely important that the next phase of reforms is implemented and that Pakistan increases both public and private investment levels, which are among the lowest in the world.

The report observed that several factors are contributing to low investment levels. Another reason for the very low investment levels has to do with the low domestic savings rate in Pakistan at below 10 percent of GDP, which compares unfavorably with an average of around 25 percent in South Asia, it added limited access to financial markets, high dependency ratio and low returns on financial instruments all contribute to this low rate of savings.

The report also discusses the importance of increasing efforts to attract more foreign direct investment from the current low levels of 0.3 percent of GDP, by improving the overall business climate and address regulatory weaknesses at the sectoral level that may be affecting the country ability to attract investment.

The government is implementing a number of reforms to improve the country competitiveness. These include efforts to revive the privatisation process, which will increase efficiency in management and improve service delivery, to improve access to and the quality of electricity, to promote financial inclusion and to simplify the trade regime and make it more transparent.

 

[farhan_9909]

anything below 5% infact anything below 5.3% this year indicates that govt has failed on economic front.

Last year we suffered because of mere 3% industrial sector growth,this year so far the growth is close to 5%.So i am hopeful that growth rate will eventually surpass 5% mark this year since 2006-07

 

[Talwar e Pakistan]

WASHINGTON - Pakistan gross domestic product growth will accelerate to 4.5 in the current fiscal year and to 4.8 percent in fiscal year 2016-17, said a World Bank report.

The report “Pakistan Development Update” said that the growth will be supported by strong services growth and a slight improvement in the industry sector. It also discussed the important improvements of the external sector in Pakistan over the past few years, noting that foreign exchange reserves have increased from precariously low levels to appropriate level given the size of Pakistan imports.

The current account deficit narrowed to $2.6 billion in FY2014-15 compared to $3.1 billion in the previous year, a result of record high remittances in the order of $18.7 billion. External financial inflows continued strong, although lower than in the previous year. As a result, the balance of payments was positive for the second year in a row.

World Bank Country Director for Pakistan Patchamuthu Illangovan says that there is an improvement in Pakistan overall economic environment. With macroeconomic stability largely restored, Pakistan can focus now on boosting development outcomes which were not where one would expect, given the country income level.

To improve the country competitiveness, it is extremely important that the next phase of reforms is implemented and that Pakistan increases both public and private investment levels, which are among the lowest in the world.

The report observed that several factors are contributing to low investment levels. Another reason for the very low investment levels has to do with the low domestic savings rate in Pakistan at below 10 percent of GDP, which compares unfavorably with an average of around 25 percent in South Asia, it added limited access to financial markets, high dependency ratio and low returns on financial instruments all contribute to this low rate of savings.

The report also discusses the importance of increasing efforts to attract more foreign direct investment from the current low levels of 0.3 percent of GDP, by improving the overall business climate and address regulatory weaknesses at the sectoral level that may be affecting the country ability to attract investment.

The government is implementing a number of reforms to improve the country competitiveness. These include efforts to revive the privatisation process, which will increase efficiency in management and improve service delivery, to improve access to and the quality of electricity, to promote financial inclusion and to simplify the trade regime and make it more transparent.

We grew 9.7% This year....

 

[Jungibaaz]

We grew 9.7% This year....

Not true at all. And you're inviting trolls to come make a mockery of this thread when you post like this and without a source. Maybe shave about 5% off and you'll be closer to the actual figures.

GDP growth (annual %) | Data | Table
GDP Annual Growth Rate - Countries - List

 

[Baidar Bakht]

We grew 9.7% This year....

Bhai ap population ka bta rhy ho?

 

[Talwar e Pakistan]

Bhai ap population ka bta rhy ho?

No... Our GDP went from 246 to 270 this year. That is a 9.7 increase.

Not true at all. And you're inviting trolls to come make a mockery of this thread when you post like this and without a source. Maybe shave about 5% off and you'll be closer to the actual figures.

GDP growth (annual %) | Data | Table
GDP Annual Growth Rate - Countries - List

Pakistan GDP cross $270 Billion mark

 

[Manindra]

No... Our GDP went from 246 to 270 this year. That is a 9.7 increase.


Pakistan GDP cross $270 Billion mark

This include inflation also.

 

[protest]

No... Our GDP went from 246 to 270 this year. That is a 9.7 increase.


Pakistan GDP cross $270 Billion mark

You have no idea about economics, leave it to experts before you make a absurd claim.

 

[kaykay]

No... Our GDP went from 246 to 270 this year. That is a 9.7 increase.


Pakistan GDP cross $270 Billion mark

That's with inflation. If you adjust inflation then you will get something 4-5%, the true growth.

 

[Devil Soul]

Despite concerns, Pakistan on growth path: WB
THE NEWSPAPER'S STAFF REPORTER — PUBLISHED ABOUT 6 HOURS AGO
ISLAMABAD: The World Bank has projected Pakistan to move on growth path in short term but expressed concerns over low foreign investment and domestic savings, increased external risks, slower than anticipated stabilisation and reform agenda.

Released on Wednesday, World Bank’s ‘Pakistan Development Update’ projects GDP growth to accelerate to 4.5 per cent in 2015-16 and 4.8pc in 2016-17, supported by ‘strong services growth and a slight improvement in the industry sector’.

The report assumes that some of the constraints affecting the industry, like power outages, will be addressed in the forecast period.

Also read: How countries game the World Bank’s rankings

It forecasts that investment is set to increase, given both greater fiscal space as well as an increase in private sector investment as the government’s reform agenda begins to bear fruit. However, it noted that private sector credit was lower last year than a year before.

It said the investment scene would be supported by the China-Pakistan Economic Corridor (CPEC).

“External risks have increased and despite recent reforms, Pakistan has limited buffers to absorb major shocks,” the World Bank said.

Structural bottlenecks as well as weak external demand constrained business activity and credit demand by the private sector.

A relatively high real cost of borrowing as inflation declined at a much faster pace than lending rates also played a role in subdued private sector credit demand.

The fast increase in borrowing by the government also tightened financing conditions.

External and internal balances are projected to improve. The current account will reach around 1pc of GDP during the forecast period as it will be supported by robust remittances and a continuation of external financial flows.

Fiscal consolidation is projected to continue while the government has an ambitious target of reducing the deficit to 3.5pc of GDP by 2016-17.

Debt levels are projected to remain in a slowly declining trend while reserves have already achieved more comfortable levels.

But downside risks remain as a more volatile external environment going forward may result in lower financial inflows.

The slowdown of the Chinese economy and slow recovery in the eurozone will weaken external demand, affecting both trade and investment.

Low energy prices benefit Pakistan in the form of lower energy subsidies and fuel imports — but it may eventually affect remittances which have been crucial in financing Pakistan’s persistent trade deficit and supporting consumption, the report notes.

Fiscal consolidation will require strong tax revenue efforts by the government as well as gradual phasing-out of energy-related subsidies and of reduced support to loss-making SOEs.

Efforts to tighten fiscal policy will also need closer coordination with the provinces, and ensuring that progress in the country’s decentralisation effort better aligns the province’s responsibilities with the increased resource envelop that resulted from the 7th NFC award.

Efforts to prevent major shocks to the government’s fiscal stance should also include reducing the fiscal risks of the frequent natural disasters affecting Pakistan.

The bank is worried that the share of investment in GDP remains relatively small, at 15.1 percent of GDP, about half of the South Asian average at 30 percent.

More worryingly, private investment as a share of GDP has been declining and stood at 9.7 percent of GDP in fiscal 2014-15.

“This low investment has implications for Pakistan’s long term growth potential that has been on a clear declining long run trend,” the report adds.

“Lack of complementary public investments and a weak investment climate are constraining private sector investment,” it noted, adding that constrained fiscal space was limiting the government’s ability to make the necessary complementary public investments.

On the positive side, transport, finance and insurance and government services all posted strong growth.

Government efforts for fiscal consolidation continue, but progress is slower than anticipated. The reduction in the deficit was achieved through curtailing the federal development budget and above target non-tax revenues while tax revenues continued to fall short of targets.

Energy subsidies remain large, although lower oil prices have contributed to limiting the energy subsidy bill.

Total public debt stood at 64.6 percent of GDP at the end of 2014-15, a slight decline from the previous year.

Published in Dawn, November 12th, 2015