Amir Khan

The inflation rate, averaging 29% during July-December period of the current year, is expected to ease due to fiscal consolidation, monetary tightening, and improved availability of food and key imported inputs. Pakistan's overall recovery is hindered by moderate confidence, and high inflation is eroding the purchasing power of its population, Member Development Projects at the Ministry of Planning Commission and Development Rafiullah Kakar told WealthPK. The Asian Development Bank's (ADB) latest outlook for December 2023 highlights the high growth of developing Asia while addressing concerns over Pakistan's economic recovery.

As per the report, growth forecasts for the South Asian sub-region for 2024 were maintained at 6%, despite downward revisions for Bangladesh and Maldives. The projections for 2024 for other South Asian economies, including Pakistan, remained unchanged. For the broader Asia-Pacific region, the ADB revised its economic forecast for 2023 to 4.9%, up from the previous estimate of 4.7% in September. This positive adjustment is attributed to higher-than-expected growth in China and India driven by vigorous domestic demand. The forecast for 2024 remains steady at 4.8%.

"China's economy is projected to expand by 5.2% in 2023, surpassing the previous estimate of 4.9%, fuelled by household consumption and public investment. India's growth outlook has been raised to 6.7% from 6.3%, reflecting faster-than-expected expansion in July-September," Rafiullah added. While inflation in the region is gradually under control, the ADB emphasized the importance of remaining vigilant due to the potential risks.

The growth outlook for Southeast Asia in 2023 has been lowered to 4.3% due to a weak demand for manufacturing exports. Risks to the overall outlook include persistently elevated interest rates in advanced economies and potential supply disruptions from geopolitical events such as the Ukraine crisis. The ADB observed a divergence in economic performance among major advanced economies, with the likelihood of a soft landing in the United States increasing.

Despite a tight labor market, the US experienced accelerated growth and decreased headline inflation. South Asia's growth forecast for 2023 was revised to 5.7%. In conclusion, while Asia's growth remains resilient, individual economies, including Pakistan, face challenges that require careful management to ensure sustained and inclusive economic development. The ADB stressed the importance of addressing inflation, and global risks and maintaining economic resilience in the face of uncertainties.

Credit: INP-WealthPk