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WB estimates Pak growth at 5.5pc


ISLAMABAD -  The World Bank has estimated Pakistan’s GDP growth at 5.5 percent for the ongoing fiscal year 2017-18, well below than the government’s target of 6 percent.

“In Pakistan, growth is forecast to pick up to 5.5 percent in FY2017/18, and reach at an average 5.9 percent a year over the medium term on the back of continued robust domestic consumption, rising investment, and a recovery in exports,” the World Bank stated in its January 2018 Global Economic Prospects. 
Pakistan’s growth continued to accelerate in last financial year FY2016/17 (July-June) to 5.3 percent, somewhat below the government’s target of 5.7 percent as industrial sector growth was slower than expected. Activity was strong in construction and services, and there was a recovery in agricultural production with a return of normal monsoon rains. In the first half of FY2017/18, activity has continued to expand, driven by robust domestic demand supported by strong credit growth and investment projects related to the China-Pakistan Economic Corridor. Meanwhile, the current account deficit widened to 4.1 percent of GDP compared to 1.7 percent last year, amid weak exports and buoyant imports.
The report also highlighted the main risks to the outlook are domestic, including fiscal slippages. Fiscal consolidation slowed in 2017 as a result of revenue shortfalls and increased government spending. Current account deficits gradually widened across the region (e.g., India, Bangladesh, Pakistan). In particular, non-performing loan ratios remained high, at around 10 percent, despite progress in some countries (e.g., Maldives, Pakistan and Afghanistan).
Increasing contingent liabilities related to infrastructure projects slippages relating to upcoming elections and weak tax revenues could derail fiscal consolidation efforts. Weaker debt sustainability could weigh on confidence, financial markets and already-weak investment.
The World Bank forecasted global economic growth to edge up to 3.1 percent in 2018 after a much stronger-than-expected 2017, as the recovery in investment, manufacturing, and trade continues, and as commodity-exporting developing economies benefit from firming commodity prices.
However, this is largely seen as a short-term upswing. Over the longer term, slowing potential growth—a measure of how fast an economy can expand when labor and capital are fully employed—puts at risk gains in improving living standards and reducing poverty around the world, the World Bank warns in its January 2018 Global Economic Prospects.
Growth in advanced economies is expected to moderate slightly to 2.2 percent in 2018, as central banks gradually remove their post-crisis accommodation and as an upturn in investment levels off. Growth in emerging market and developing economies as a whole is projected to strengthen to 4.5 percent in 2018, as activity in commodity exporters continues to recover.
Growth in South Asia is forecast to accelerate to 6.9 percent in 2018 from an estimated 6.5 percent in 2017. Consumption is expected to stay strong, exports are anticipated to recover, and investment is on track to revive as a result of policy reforms and infrastructure upgrades. Setbacks to reform efforts, natural disasters, or an upswing in global financial volatility could slow growth . India is expected to pick up to a 7.3 percent rate in fiscal year 2018/19, which begins April 1, from 6.7 percent in FY 2017/18. Pakistan is anticipated to accelerate to 5.8 percent in FY 2018/19, which begins July 1, from 5.5 percent in FY 2017/18.
Source: The Nation