ADB: Political Unrest in Pakistan Poses Risk to Economic Stability & Reforms

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Asif Iqbal | April 11, 2024 | 11:06 PM IST | Asia, Pakistan News, World | Follow on Google News

ADB: Political Unrest in Pakistan Poses Risk to Economic Stability & Reforms

ADB: Political Unrest in Pakistan Poses Risk to Economic Stability & Reforms

Political instability, devastating floods, and policy slippage have emerged as significant hurdles to Pakistan’s economic advancement, as outlined in the Asian Development Bank’s (ADB) annual Asian Development Outlook Report 2024. The ADB also highlights uncertainty as a risk factor impeding the nation’s efforts to stabilize, recover, and implement reforms, as reported by Geo News.

Political Unrest in Pakistan Poses Risk:GDP Contractions and Investment Declines

“The economy contracted due to devastating floods, political unrest, and policy slippage, which restrained investment, consumption, and production,” the report states. In fiscal year 2023, Pakistan’s GDP declined by 0.2 per cent (ending on June 30, 2023), following a robust expansion of 6.2 per cent in FY2022. The ADB notes that both public and private investment experienced significant declines, with public investment falling by 31.6 per cent due to fiscal constraints and private investment decreasing by 14.6 per cent in line with a pessimistic economic outlook.

Private consumption growth also dwindled to 2.4 per cent from 7.1 per cent in FY2022, attributed to rising living costs and sluggish nominal income growth amid weakening employment prospects. However, a notable decrease in imports, resulting from ad hoc import controls, enabled net exports to make a positive contribution to growth.

Political Unrest in Pakistan Poses Risk:Projected Growth and Sectoral Challenges

The ADB projects Pakistan’s growth to rebound to 1.9 per cent this year, driven by a resurgence in private sector investment linked to reform progress and a more stable government transition. By FY2025, growth is expected to reach 2.8 per cent, fueled by increased confidence, reduced macroeconomic imbalances, structural reforms, political stability, and improved external conditions.

Despite these projections, challenges persist, particularly in the construction industry, where rising expenses and tax hikes have stymied growth. Pakistan’s deficit is forecasted to peak at 25 per cent this fiscal year, necessitating reliance on friendly nations and international financial organizations for external payment sources.

Political Unrest in Pakistan Poses Risk:Inflation Concerns and Price Trends

The report highlights inflation as a pressing issue, reaching a five-decade high due to supply disruptions and currency depreciation, particularly affecting food and energy prices. With energy prices expected to remain elevated, inflation rates are projected to hover around 25 per cent this year. However, the report offers a glimmer of hope, suggesting that food commodity prices will stabilize in the following year.

Asif Iqbal

Asif Iqbal is a seasoned news writer with a passion for delivering the latest updates to the public. Currently serving as the senior writer at VoM News, a prominent news outlet known for its comprehensive coverage of diverse topics, Asif has established himself as a reliable source of information. With a keen eye for detail and a knack for storytelling, he consistently provides readers with well-crafted articles that cover a wide range of news categories. His dedication to journalistic integrity and his commitment to staying ahead of the news curve make him an invaluable asset to Vom News, ensuring that readers are always well-informed on the issues that matter most. You can find his work and stay updated on current events by visiting vomnews.in.