ISLAMABAD: World Bank (WB) warned that Pakistan, with the lowest GDP growth of 0.5 per cent among all other South Asian nation, would face difficult times during the upcoming next two-years period.
“In Pakistan, economic growth is projected to remain below potential, at 0.5pc for FY21 compared to over 4pc annual average in the three years to FY2019,” said the bank in its latest South Asia Economic Focus report, a twice-a-year publication.
Speaking ahead of the report’s launch, Hartwig Schafer, World Bank’s vice president for the South Asia region, said: “The collapse of South Asian economies during Covid-19 has been more brutal than anticipated, worst of all for small businesses and informal workers who suffer sudden job losses and vanishing wages.”
In response to a question, he said the bank did not publish Pakistan’s poverty numbers for technical reasons, but an increase in the poverty rate was high as many other countries in the region.
World Bank said that external financing risks that could be compounded by difficulties in rolling-over bilateral debt from non-traditional donors and tighter international financing conditions.
WB predicted considerable downside risks to the outlook of Pakistan’s economy, with the most significant being a possible resurgence of the Covid-19, gearing up more global or domestic lockdowns and delaying implementation of critical structural reforms.
According to the report, expenditures will remain substantial due to sizeable interest payments, a rising salary and pension bill, and absorption of state-owned enterprises’ guaranteed debt by the government in the energy sector.
“Given anaemic growth projections in the near term, poverty is expected to worsen. Vulnerable households rely heavily on jobs in the services sector, and the projected weak services growth is likely to be insufficient to reverse the higher poverty rates precipitated by the pandemic,” said the report.
It also warned that heavy rains and locus attacks on crops could cause more negative impact during the next financial year.
Meanwhile, according to WB’s report on South Asia, regional growth was likely to rebound to 4.5pc in FY21 against -7.7pc in the last fiscal year.
The growth rate of Maldives was expected at 9.3pc, India’s 5.4pc, 3.3pc of Sri Lanka, 2.5pc of Afghanistan, 1.6pc of Bangladesh, 0.6pc of Bhutan and 0.5pc of Pakistan in FY 2021. In FY20, India’s economy had contracted by 9.6pc.
