According to the Global Economic Prospects report published by the World Bank, economic growth of Pakistan is expected to increase by 5.5 percent during the current fiscal year. However, domestic risks, fiscal slippages, increasing liabilities of infrastructure projects and limited growth in tax revenues are the issues need to get serious considerations. Though the lack of revenue generation through taxes can affect fiscal consolidation, the GDP is likely to record an average growth of 5.9 percent over the medium term due to domestic consumption, rising trend of foreign and local investment and a recovery in exports of value added goods. Pakistan achieved growth rate of up to 5.3 percent during the previous fiscal year of 2016-17 against the set target of 5.7 percent due to slow growth of the industrial sector but the construction and services sector performed well along with recovery in agriculture production. The bank maintains the economy has continuously been growing since the beginning of the current fiscal year, partly by increase in the domestic demand and partly by the credit growth. The infrastructural projects related to the China-Pakistan Economic Corridor also played their role in the growth process. However, the exports are picking up now, but the report points out widening current account deficit of 4.1 percent of the GDP as compared to 1.7 percent during the previous year.
The report also points out slowed economic growth in South Asia, which remained 6.5 percent in 2017 owing to adverse weather conditions. Still the growth prospects remained robust with expected increase in household consumption, improvements in the infrastructure and introduction of policy reforms. The bank says that the regional growth will reach 6.9 percent in 2018 and will stabilise at 7.2 percent over the medium term. The governments will continue to adopt accommodative monetary policies to achieve at least the modest fiscal consolidation.
Pakistan has been facing shortfalls in its revenues which slowed down the fiscal consolidation last year. The current account deficits have gradually widened, not only in Pakistan, but also across the region. The ratios of non-performing loans remained around 10 percent despite progress in Pakistan, Afghanistan and the Maldives. The bank fears setbacks in efforts to resolve domestic bottlenecks will continue to weigh on investment and medium-term growth prospects in the region, including Pakistan. The World Bank report is a brief account of the economic performance of Pakistan. It is yet to be seen how the government react to the report and streamline the affairs.
