Pakistan’s economic recovery to continue amid steady vaccine rollout: ADB
ISLAMABAD: Pakistan’s economic growth rebounded to 3.9 per cent in the fiscal year FY 2021 ended June 30, 2021 and is expected to reach 4 per cent in FY 2022, as the business activity gradually resumes in the second year of the coronavirus disease (Covid-19) pandemic, the Asian Development Bank (ADB) said in a report on Wednesday.
According to the Asian Development Outlook (ADO) 2021 Update, the ADB’s annual flagship economic publication, Pakistan’s economy is expected to continue recovering in FY 2022, supported by stronger private investment, improving business activity, a steady vaccine rollout, and economic stimulus measures for FY 2022. Yet, significant uncertainty clouds the economic outlook over the course of the pandemic in Pakistan and worldwide.
“Pakistan’s economy is on the path to recovery, supported by the promising growth in the industry and services sectors,” ADB country director for Pakistan Yong Ye said.
“The continued rollout of the Covid-19 vaccination programme, structural reforms, and the expansion of social protection programmes are all key to ensuring inclusive and sustainable growth. Fiscal incentives and policies to boost export competitiveness, bolster the performance of the manufacturing sector, and augment private investment will continue to play an instrumental role in strengthening the economic outlook.”
Pakistan’s economic growth in FY 2021 was supported by improved Covid-19 containment strategies through the second and third waves of infections and continued accommodative fiscal and monetary policies that accelerated the recovery across all sectors.
The growth in industry, predominantly construction and small-scale manufacturing, and services are forecast to improve in FY 2022. Agriculture is also expected to continue supporting the GDP growth.
Inflation declined to 8.9 per cent in FY 2021. Food price inflation remained high due to supply chain disruptions, increased prices for wheat and sugarcane, and an extended wet monsoon. Rising international oil prices boosted energy price inflation. Yet, inflation for other goods eased thanks to the appreciation of the Pakistani rupee and a postponement of planned hikes for electricity tariffs and domestic fuel prices.
The State Bank of Pakistan maintained its policy rate at 7 per cent to support the economic recovery. Investment is expected to strengthen as global sentiment improves and the International Monetary Fund-supported stabilisation programme continues to progress.
The ADB is committed to achieving a prosperous, inclusive, resilient, and sustainable Asia and the Pacific, while sustaining its efforts to eradicate extreme poverty. Established in 1966, it is owned by 68 members, 49 from the region.
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