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WB projects Pakistan’s GDP growth at 5.5 per cent
November 11, 2017
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KARACHI: The World Bank projects that Pakistan’s GDP growth rate will be 5.5 per cent and 5.8 per cent for 2017-18 and 2018-19, respectively, “despite an increase in macroeconomic imbalances” in the last financial year.

In its Pakistan Development Update, a biannual publication shedding light on the state of the economy and its future prospects, the global lender said the economic growth rate projection assumes that oil prices would increase slightly and that “political and security risks will be managed”.

Speaking at the official launch of the report on Friday, llango Patchamuthu, the World Bank’s country director, said: “Pakistan will need to continue with economic reforms and pursue policies that make the country compete better in global markets.”

The bank believes that aggregate consumption, one of the key determinants of GDP, will grow because of a marginal recovery in remittances and higher government expenditure due to the election cycle.

It expects that the services sector will grow 5.8% in 2017-18 against 6% in the preceding year due to healthy contribution from the sub-sectors of wholesale and retail trade and transport, storage and communications.

The industrial sector is likely to post a growth of 7% against 5% in 2016-17, thanks to improved power supplies and the China-Pakistan Economic Corridor (CPEC). The bank estimates that the agriculture sector will expand 2.9% in 2017-18 against 3.5% a year ago.

Pakistan’s current account balance is already under pressure and the World Bank believes the imbalance can become unsustainable “in the absence of timely corrective policy measures”.

It projects that the current account deficit will be 4pc of GDP in 2017-18 against 4.1% in the last fiscal year.

The current account deficit jumped 112% year-on-year in the first quarter of the current fiscal year to $3.5 billion.

Although the bank anticipates a rise in foreign direct investment in view of the CPEC, it notes that capital and financial flows will not fully finance the current account deficit, resulting in a drawdown of foreign exchange reserves.


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