WASHINGTON: The World Bank, in its report, has predicted growth in Pakistan’s gross domestic product (GDP) from 4.5 per cent to 4.8 per cent in fiscal year 2016-17 mainly due to strong services growth and a slight improvement in the industry sector.
The report, with the title of “Pakistan Development Update”, said that the important improvements of the external sector in Pakistan over the past few years, noting that foreign exchange reserves have increased from precariously low levels to appropriate level given the size of Pakistan imports.
The current account deficit narrowed to $2.6 billion in FY2014-15 compared to $3.1 billion in the previous year, a result of record high remittances in the order of $18.7 billion. External financial inflows continued strong, although lower than in the previous year. As a result, the balance of payments was positive for the second year in a row.
World Bank Country Director for Pakistan Patchamuthu Illangovan said that there is an improvement in Pakistan overall economic environment. With macroeconomic stability largely restored, Pakistan can focus now on boosting development outcomes which were not where one would expect, given the country income level.
The report observed that several factors are contributing to low investment levels. Another reason for the very low investment levels has to do with the low domestic savings rate in Pakistan at below 10 percent of GDP, which compares unfavourably with an average of around 25 percent in South Asia, it added limited access to financial markets, high dependency ratio and low returns on financial instruments all contribute to this low rate of savings.
