Islamabad: Amid the federal government’s efforts to improve the economy, the Asian Development Bank (ADB) has revised Pakistan’s growth forecast for the fiscal year 2024-25 to 3%, up from the previously projected 2.8%.
The report highlights that greater macroeconomic stability, following the approval of a new International Monetary Fund (IMF) program under the Extended Fund Facility, will support economic recovery.
Additionally, industrial output growth is expected to accelerate due to the suspension of import management measures, higher investor confidence, and easier access to foreign exchange.
A more accommodating monetary policy, due to the faster-than-expected easing of inflationary pressures, should further support economic activity through rebounding private investment.
However, growth in agriculture is anticipated to weaken due to heavy monsoon rains and flood-like conditions in parts of the country from July to September 2024.
Wheat and cotton, two of Pakistan’s five major crops, are expected to perform poorly in FY25.
The Asian Development Outlook (ADO) for December 2024 also raised growth for FY2024 to 2.5%, in line with the updated official estimate.
In South Asia, growth forecasts for 2024 and 2025 have been revised downward to 5.9% and 6.3%, respectively. The lower forecast for 2024 is mainly due to India’s weaker-than-expected second-quarter growth, driven by poor performance in the manufacturing sector and lagging government spending.
Growth forecasts for Pakistan and Sri Lanka have been upgraded due to their recovery from the economic challenges of 2022-2023, while Bangladesh and Maldives have seen downward revisions.
Additionally, some weakening of growth is expected for Nepal in 2025 compared to earlier forecasts.
The report further trims the growth forecast for developing Asia to 4.9% for 2024 and 4.8% for 2025, largely due to downward revisions in East Asia and South Asia. Despite this, growth in the Caucasus, Central Asia, and Southeast Asia is projected to remain strong.
For 2025, slower growth is expected in South Asia, with weaker domestic demand.
