Is Pakistan, which is facing financial crisis, going to get relief or will the problems increase? In ADB report

Pakistan Economic Condition: The Asian Development Bank (ADB) has said that Pakistan’s economic outlook remains uncertain and the risk of decline is high.

“Political uncertainty that continues to influence macroeconomic policy-making will remain a major risk to the sustainability of stabilization and recovery efforts,” ADB said.

On the external front, due to increased conflict in the Middle East, possible disruption in supply chains will impact the economy. With Pakistan’s large external financing needs and weak external buffers, disbursements from multilateral and bilateral partners remain important. However, ADB said in its view that these flows could be disrupted due to shortcomings in policy implementation.

ADB said the IMF’s support for the medium-term reform agenda will significantly improve market sentiment and encourage affordable external financing from other sources.

ADB also said that Pakistan’s progress is expected to slow in FY 2024 and pick up in FY 2025, provided economic reforms are effective. Real GDP is projected to grow by 1.9 percent in fiscal 2024, driven by progress on reform measures and a surge in private sector investment linked to the transition to a new and more stable government.

Pakistan’s economy shrank due to floods, political uncertainty and disrupted external support. Due to this, public investment declined and private investment and industry shrank. ADB said inflation reached its highest level in five decades due to supply disruptions and rising food and energy prices due to currency depreciation.