The United Nations has said it expects the Pakistani economy to recover slightly from 2021 onwards due to increased government revenues and implementation of financial reforms.
In addition to forecast about the Pakistani economy, the report also detailed the economic outlooks of other countries in South Asia, like India, China, and Bangladesh, among others.
According to UN World Economic Situation and Prospects (WESP) report, the Indian economy is expected to grow by 5.7 per cent in the current fiscal year and is expected it to rise to 6.6 per cent in the next.
Bangladesh is forecast to grow by 8.1 per cent this fiscal year and 7.8 in the next. The report adds that only China has a higher growth rate than India among the world’s large economies.
Highlighting Pakistan, the report claimed that Islamabad has been struggling with a balance-of-payments crisis and the burden of high public debt, which has led to fiscal tightening and an IMF loan.
“High inflation and security concerns have hurt domestic demand and private investment, and the government’s ability to address the slowdown has been severely curtailed by the fiscal tightening,” stated the report.
“Export growth has fallen due to disappointing sales of textiles, which constitute 60 per cent of the country’s goods exports. Gross Domestic Product (GDP) growth has remained weak,” the report contends.
“Nevertheless, the economy of Pakistan is expected to recover slightly from 2021 onward, as increased government revenues from a tax hike allow expanded public investment…bear fruit,” the report added.
The report emphasised that the country may find its way back to the growth path if it maintains its commitment to reform along with productive investment in infrastructure and development.
Meanwhile, the State Bank of Pakistan is balancing a stronger commitment to inflation targeting with a managed depreciation of the currency, but this is complicated by increases in energy tariffs.
“While the tightened monetary policy in Pakistan is expected to help move inflation towards target levels in the years to come, the country’s inflation remains extremely vulnerable” the report cautioned.
‘Global economy anaemic, incomes likely to suffer’
The UN expects growth to remain “anaemic” in most advanced economies, including the United States. Japan may do better, because of the Olympics, according to Richard Kozul-Wright.
Wright, the head of globalisation and development strategies at the UN Conference on Trade and Development (UNCTAD) is the co-author of the report released earlier this week.
“Quite a large number of countries will actually see stagnation or decline in per capita incomes this year, predominantly in Latin America and Sub-Saharan Africa,” he said.
“Impacted by prolonged trade disputes, the global economy suffered its lowest growth in a decade, slipping to 2.3 per cent in 2019… however, [the world] could see a slight uptick in economic activity in 2020 if risks are kept at bay,” the UN said.
The report further states that growth of 2.5 per cent in 2020 is possible, “but a flareup of trade tensions, financial turmoil, or an escalation of geopolitical tensions could derail a recovery”.
It said a prolonged weakness in global economic activity may cause significant setbacks for sustainable development, including the goals to eradicate poverty and create decent jobs for all.