5/17/2023 0 Comments Pakistan news headlines![]() ![]() Agricultural output is expected to contract for the first time in more than 20 years due to the floods. Real GDP growth is expected to slow sharply to 0.4 percent in FY23, reflecting corrective tighter fiscal policy, flood impacts, high inflation, high energy prices and import controls. With the destruction of infrastructure and disrupted access to schools, medical facilities, and sanitation systems, the floods have negatively impacted health and education outcomes especially for rural areas, potentially affecting long-term human capital accumulation.Įconomic growth is expected to slow and remain below potential in the medium-term. Similarly, dwindling foreign reserves, import restrictions, flood impacts, high fuel costs, policy uncertainty, and the slowdown in domestic and global demand have affected industry and service sector activity. ![]() The devastating floods, along with difficulties in securing quality fertilizers and animal feed, have reduced agricultural output and labor opportunities for low-income workers. Furthermore, distortive policy measures, including periods of informal exchange rate restrictions and import controls, delayed the IMF-EFF program, and contributed to creditworthiness downgrades, lower confidence, high yields and interest payments, and the loss of access to international capital markets.Įconomic activity has fallen with policy tightening, flood impacts, import controls, high borrowing and fuel costs, low confidence, and protracted policy and political uncertainty. These imbalances were exacerbated by the catastrophic flooding in 2022, surging world commodity prices, tightening global financing conditions, and domestic political uncertainty. With high public consumption, economic growth increased substantively above potential in FY22 that led to strong pressures on domestic prices, external and fiscal sectors, the exchange rate, and foreign reserves. Pakistan’s economy is currently under severe stress with low foreign reserves, a depreciating currency, and high inflation. Long-term growth of real gross domestic product (GDP) per capita therefore has been low, averaging only around 2.2 percent annually over 2000-22. In addition, reflecting a consumption-driven growth model, with limited productivity-enhancing investment and exports, strong economic growth often comes at a cost of economic imbalances and frequent macroeconomic crises. However, this rapid poverty reduction has not fully translated into improved socio-economic conditions, as human capital outcomes have remained poor and stagnant, with high levels of stunting at 38 percent and learning poverty at 75 percent. Pakistan made significant progress towards reducing poverty between 20 when the expansion of off-farm economic opportunities and increased inflow of remittances allowed over 47 million Pakistanis to rise out of poverty. Pakistan is experiencing severe economic challenges reflecting long-standing structural weaknesses. ![]()
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