World Bank revises Pakistan GDP growth rate to 5.2%
11 Jan 2017 update: World Bank revises Pakistan’s GDP growth rate upwards to 5.2 percent for fiscal year 2017 and 5.5 percent for 2018.
Pakistan’s economy is set to grow by a robust 5.4 percent by 2018 as Chinese investment from a multi-billion dollar infrastructure project flows into the country, the World Bank predicted in a new report on Thursday.
The cash-strapped country, for years plagued by a bloody homegrown Taliban insurgency, has been battling to get its shaky economy back on track and solve a chronic energy crisis that cripples its industry, says an AFP report in Newsweek.
Pakistan GDP growth forecasts by world’s leading institutions
World Bank | 2018 | 5.4%
IMF | 2020 | 5.3%
Harvard CID | 2024 | 5.07%
Oxford Economics | 2020 | 5.2%
The Economist | 2016 | 5.7%
But now confidence in South Asia’s second-biggest economy is growing, with security improving and the International Monetary Fund claiming in October that it has emerged from economic crisis after completing a bailout program, though it still faces major challenges.
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Pakistan recorded a 4.7 percent growth in gross domestic product (GDP) for the fiscal year that ended June 2016, the highest rate in eight years, and Prime Minister Nawaz Sharif has set an ambitious target of 5.7 percent for the current year.
He is banking on structural reforms, the improved energy sector, taxation—and China’s ambitious $46 billion infrastructure project, the China-Pakistan Economic Corridor (CPEC), linking its western province of Xinjiang to the Arabian Sea via Pakistan.
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The World Bank report appeared optimistic about his plans, predicting even further growth in 2018.
“The pace of Pakistan’s economic growth will accelerate to 5.4 percent in fiscal 2018,” the Bank report said, observing that a moderate increase in investment mainly related to CPEC projects is expected to contribute to an acceleration of growth.
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The Bank also noted Pakistan’s efforts to address grinding poverty, including with revised ways to measure it.
“Based on the revised poverty line… the percentage of people living below the poverty line decreased from 64.3 percent in 2002 to 29.5 percent in 2014,” the report said.
Illango Patchamutu, World Bank country director for Pakistan, said the country needs to push forward with deeper structural reforms, and that the World Bank stood ready to support such an agenda. – AFP/Newsweek
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BMI 2017 Pakistan Country Risk Report
In its 2017 Pakistan Country Risk Report, BMI Research UK forecasts Pakistani economy to grow by 4.2% in FY2016/17, after an estimated growth rate of 4.7% in FY2015/16. Strong growth momentum and an expansionary budget will be supportive factors, but the rise in global oil prices will remove a major growth tailwind.
BMI also says that Pakistan’s entry into the MSCI Emerging Markets Index will provide a significant boost to the country’s portfolio account inflows over the coming years and highlights the progress made under the IMF-led reforms since 2013. However, continued reforms will be needed to ensure the country maintains its Emerging Market status and takes full advantage of the impending inflows.
The risks to real GDP growth forecast are tilted to the upside. The Pakistani economy faces a sweet spot of being very exposed to global energy prices yet relatively shielded from global growth weakness, and there are incipient signs that improved fiscal management and energy availability are driving a recovery in the crucial manufacturing sector.