On 11 April, the Asian Development Bank (ADB) in its April 2024 ‘Asian Development Outlook’ report expressed uncertainty over Pakistan’s economic outlook amid high risks and political uncertainty threatening the sustainability of stabilization and reform efforts. Key issues mentioned include potential supply chain disruptions from increasing tensions in the Middle East, large external financing requirements coupled with weak external buffers, and lapses in policy implementation.

It projected that economic growth for FY25 would reach 2.8 per cent, boosted by higher confidence, lower macroeconomic imbalances, and greater political stability. It also mentioned that support from the IMF in the form of a medium-term reform agenda could improve market sentiment and external financing significantly. However, the subdued growth of FY24 will only pick up in FY25 if there are effective economic reforms. With regard to GDP, the report projected a growth of 1.9 per cent in FY24, caused by private sector investment linked to progress on reforms and a more stable government. Inflation will remain at 25 per cent due to high energy prices in 2024 and then ease in 2025. However, increases in energy prices as part of the IMF’s Stand-by Agreement could keep inflation high despite improvements in food supplies.

The report predicted growth in the supply, led by post-flood recovery, improved weather conditions, and a government package of subsidized credit and farm inputs. An increase in farm output could help enhance manufacturing, which expanded in three of the first six months of FY24. The current account deficit, however, is expected to widen to 1.5 per cent of GDP in FY24 owing to larger imports as domestic demand strengthened and the currency market stabilized. It also highlighted an increase in tax collection by 29.5 per cent after reforms in personal income tax, higher taxes on property transfers, and reintroducing taxes on cash withdrawals from banks. (Amin Ahmed, “Pakistan’s economic outlook uncertain with high risks on the downside: ADB report,” Dawn, 11 April 2024)