TAHIR AMIN

ISLAMABAD: Pakistan’s GDP growth is estimated to rise to 5.8 percent in fiscal year 2017-18, before moderating to 5 percent in fiscal year 2018-19, reflecting tighter policies to improve macroeconomic stability, says the World Bank (WB).

The WB report titled “global economic prospects, the turning of the tide”, maintains that Pakistan’s GDP growth rose in fiscal year 2017-18 was supported by infrastructure projects funded by the China Pakistan Economic Corridor (CPEC), improvements in energy supply, and persistent private consumption growth.

A further deterioration in fiscal balances, a continued buildup of debt, and widening current account deficits in Pakistan present significant vulnerabilities to a tightening of domestic or external financing conditions, says the report.

An increase in political uncertainty (e.g., Afghanistan, Bangladesh, Pakistan, and Sri Lanka) and further deterioration in the security environment in some countries (e.g., Afghanistan) might dampen confidence and set back growth, the report further maintains.

With price and wage pressures rising, and amid markedly higher oil prices, several large commodity importers have begun to tighten policies (e.g., Georgia, Pakistan, the Philippines, Romania, and Turkey).

Import growth is accelerating amid strengthening domestic demand, while higher energy prices are also contributing to a further deterioration of trade and current account balances (e.g., India, Nepal, and Pakistan).

Monetary policy in the region has remained broadly accommodative and supported fast credit growth (e.g., Bangladesh, Pakistan); however, the State Bank of Pakistan recently hiked its policy rate to reduce growing external pressures.

The report further maintained that growth in the South Asia region is projected to accelerate to 6.9 percent in 2018, mainly reflecting strengthening domestic demand in India as temporary policy-driven disruptions fade.