The World Bank has issued a sobering assessment of Pakistan's economic trajectory, projecting a modest growth of 1.8% for the current fiscal year ending in June 2024. This projection highlights the pressing need for structural reforms as the nation struggles with soaring inflation, which has pushed nearly 40% of its population below the poverty line.
In its latest "Pakistan Development Update: Fiscal Impact of Federal State-Owned Enterprises," the World Bank attributed the sluggish economic recovery to stringent monetary and fiscal policies, import control measures to safeguard limited foreign reserves, and subdued economic activity amidst low confidence levels.
The report emphasized the necessity of a clearly articulated, ambitious, and credible economic agenda to reduce uncertainty and restore confidence.
The World Bank warned that without major structural reforms, growth would likely remain muted due to persistently low investment, ongoing external imbalances, distortionary fiscal policies, and substantial state intervention in the economy.
The report painted a grim picture of Pakistan's economy, indicating that over 10 million more people are at risk of falling into poverty in the cash-strapped nation. Despite a nascent economic recovery, poverty alleviation efforts remain insufficient, with economic growth projected to stagnate at a paltry 1.8%, leaving approximately 98 million Pakistanis struggling with poverty.
The report also highlights the vulnerability of those hovering just above the poverty line, with an estimated 10 million individuals at risk of slipping into poverty.
The World Bank also pointed out concerns about food security, particularly in flood-affected regions, where acute food insecurity is projected to increase. Despite some positive indicators, including a narrowed current account deficit and reduced domestic demand, challenges such as elevated inflation and policy uncertainty persist.
Looking ahead, the World Bank projected a bleak economic outlook, with growth expected to remain below potential and poverty reduction limited in the medium term.
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