Qudsia Bano

Pakistan's economic outlook remains uncertain, with high downside risks. Political uncertainty is identified as a key risk factor that could jeopardize the sustainability of stabilization and reform efforts, reports WealthPK. The Asian Development Bank (ADB) recently released its outlook on Pakistan's economy, highlighting both growth prospects and political risks. The report provides valuable insights into the challenges and opportunities facing Pakistan's economy. In light of these findings, experts from various sectors have weighed in on the implications of the ADB's outlook. Dr. Shahid Javed, an economist at the State Bank of Pakistan, emphasized the need for policymakers to address political uncertainties to mitigate the risks to economic stability. "Political stability is essential for attracting investments and driving growth. The policymakers must focus on building consensus and implementing reforms to create an enabling environment for economic development," he said. Furthermore, the ADB report highlights the potential supply chain disruptions from the escalation of conflict in the Middle East, which could weigh on Pakistan's economy.

Dr. Hamid Haroon, former economist at the World Bank, emphasized the importance of diversifying the supply chains and reducing dependence on volatile regions. "Pakistan needs to explore alternative trade routes and strengthen domestic production to mitigate the impact of external shocks," he said. On the positive side, the report projects economic growth to reach 2.8% for the Fiscal Year 2025, driven by higher confidence, reduced macroeconomic imbalances, and progress on structural reforms. "However, achieving this growth target depends on addressing political uncertainties and implementing reforms effectively," said Haroon. Inflation remains a concern, with the forecast to remain high at about 25% in the current year. The rising energy prices and supply chain disruptions are seen as the key drivers of inflationary pressures. Dr. Haroon emphasized the importance of prudent monetary and fiscal policies to curb inflation. "Effective management of inflation requires a coordinated approach, including tighter monetary policy and targeted subsidies to mitigate the impact on vulnerable populations," he added.

Credit: INP-WealthPk