World Bank forecasts Pakistan’s economy to grow by 5.5% in FY18

1188

ISLAMABAD, June 5 (APP): The World Bank forecasts that Pakistan
is expected to pick up to a 5.2 percent rate in fiscal 2017 (July 1,
2016 – June 30, 2017) and to 5.5 percent in the next fiscal year,
reflecting an upturn in private investment, increased energy supply,
and improved security.
The overall growth in the South Asian region is forecast to
pick up to 6.8 percent in 2017 and accelerate to 7.1 percent in
2018, reflecting a solid expansion of domestic demand and exports,
World Bank’s June 2017 Global Economic Prospects said.
The report said that global economic growth will strengthen to
2.7 percent in 2017 as a pickup in manufacturing and trade, rising
market confidence, and stabilizing commodity prices allow growth to
resume in commodity-exporting emerging market and developing
economies.
The growth in advanced economies is expected to accelerate to
1.9 percent in 2017, which will also benefit the trading partners of
these countries.
Global financing conditions remain favorable and commodity
prices have stabilized. Against this improving international
backdrop, growth in emerging market and developing economies as a
whole will pick up to 4.1 percent this year from 3.5 percent in
2016.
Growth among the world’s seven largest emerging market
economies is forecast to increase and exceed its long-term average
by 2018. Recovering activity in these economies should have
significant positive effects for growth in other emerging and
developing economies and globally.
Nevertheless, substantial risks cloud the outlook. New trade
restrictions could derail the welcome rebound in global trade.
Persistent policy uncertainty could dampen confidence and
investment. Amid exceptionally low financial market volatility, a
sudden market reassessment of policy-related risks or of the pace of
advanced-economy monetary policy normalization could provoke
financial turbulence. Over the longer term, persistently weak
productivity and investment growth could erode long-term growth
prospects in emerging market and developing economies that are key
to poverty reduction.
“For too long, we’ve seen low growth hold back progress in the
fight against poverty, so it is encouraging to see signs that the
global economy is gaining firmer footing,” World Bank Group
President Jim Yong Kim said.
“With a fragile but real recovery now underway, countries
should seize this moment to undertake institutional and market
reforms that can attract private investment to help sustain growth
in the long-term. Countries must also continue to invest in people
and build resilience against overlapping challenges, including
climate change, conflict, forced displacement, famine, and disease.”
The report highlights concern about mounting debt and deficits
among emerging market and developing economies, raising the prospect
that an abrupt rise in interest rates or tougher borrowing
conditions might be damaging.
At the end of 2016, government debt exceeded its 2007 level by
more than 10 percentage points of GDP in more than half of emerging
market and developing economies and fiscal balances worsened from
their 2007 levels by more than 5 percentage points of GDP in one-
third of these countries.
“The reassuring news is that trade is recovering,” said World
Bank Chief Economist Paul Romer. “The concern is that investment
remains weak. In response, we are shifting our priorities for
lending toward projects that can spur follow-on investment by the
private sector.”
A bright spot in the outlook is a recovery in trade growth to
4 percent after a post-financial crisis low of 2.5 percent last
year.
The report highlights a key area of weakness in global trade,
trade among firms not linked through ownership. Such trade through
outsourcing channels has slowed much more sharply than intra-firm
trade in recent years.
This is a reminder of the importance of a healthy global
trading network for the less integrated firms that account for the
majority of enterprises.
“After a prolonged slowdown, recent acceleration in activity
in some of the largest emerging markets is a welcome development for
growth in their regions and for the global economy,” said World Bank
Development Economics Prospects Director Ayhan Kose. “Now is the
time for emerging market and developing economies to assess their
vulnerabilities and strengthen policy buffers against adverse
shocks.”