World Bank on Monday launched its Global Economic Prospects report for June 2018 predicting Pakistan’s economic growth would slow down in the next financial year 2018-19.
This comes on the heels of a decade high growth rate of 5.8 percent which was achieved in the outgoing financial year 2017-18 will fall to 5 percent in FY19, said the World Bank.
The reason attributed to the slowdown in economic growth by the WB is on the assumption Pakistan could be in an IMF programme which would need it to implement stricter fiscal and monetary policies.
During the last two years of its tenure, the previous PML-N government had enforced lose monetary and expansionary fiscal policies, which upended the gains made under a three-year IMF bailout programme contracted in mid-2013.
The Washington-based lender said Pakistan along with other regional countries as facing challenges of further worsening in fiscal balances and continuing increase of debt and rising current account deficit.
It added monetary policy in the South Asian region had been broadly accommodative and sustained increasing credit growth.
However, the central bank recently has hiked up its policy rate to decrease rising external pressures.
The WB report highlighted around half of the world’s nations were experiencing a rise in growth and it foresaw the global economy leaving the legacy of the global financial crisis of the previous decade behind.
Also, it projected global economic growth will remain robust at 3.1 per cent in 2018 before lagging gradually over the next two years as the advanced-economy growth accelerates and the recovery in major commodity-exporting, emerging market and developing economies levels off.
Activity in advanced economies is expected to grow 2.2 percent in 2018 before easing to a 2 percent rate of expansion next year, as central banks gradually remove monetary stimulus, the June 2018 Global Economic Prospects said.
Growth in emerging market and developing economies overall is projected to strengthen to 4.5 percent in 2018, before reaching 4.7 percent in 2019 as the recovery in commodity exporters matures and commodity prices level off following this year’s increase.
Growth in the South Asian region is projected to strengthen to 6.9 percent in 2018 and to 7.1 percent in 2019, mainly as factors holding back growth in India fade.
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