ADB forecast
Anew report released by the Asian Development Bank forecast a modest but broad-based recovery in Pakistan, projecting the economy's expansion by 2pc in the present fiscal year. The Manila-based bank says the country's economy is moving out of the Covid-19-induced sluggishness and beginning to crawl forward. This is in line with the government's GDP target of 2.1pc and a significant improvement over the negative growth of 0.4pc last year. Indeed, short-term economic trends show that the economy is returning to the path of recovery.
Yet the major lender forecast in the Asian Development Outlook Update report should not be taken as gospel because it assumes that the impact of the Covid-19 health crisis will subside by end-December this year and the implementation of structural reform under the IMF Extended Fund Facility to address macroeconomic imbalances will resume.
The bank projections about growth, a stable balance-ofpayments situation in spite of a bigger current account gap of 2.4pc owing to an expected fall in remittances compared with 1.1pc last year, recovery in the industrial and agriculture sectors, and domestic demand growth, provide us with a reason for cautious optimism though it is too early for celebrations. This means that while so far the trends show that the economy is getting back on its feet, in spite of earlier fears of further contraction, the future remains uncertain.
Pakistan's success in controlling the virus and reopening its economy has been tempered with fears over a possible escalation in infection rates, even if business activity is picking up momentum.
Improved GDP growth prospects aside, the report has also pointed out that Pakistan's economic expansion will remain significantly lower than that of other economies in the South Asian region. The economy of the Maldives, which was the most affected by the virus in the region, is likely to grow by 10.5pc. India, the second worst-affected country economically, is forecast to make a comeback with an 8pc GDP growth rate. Similarly, Bangladesh's economy is expected to expand by 6.8pc and Sri Lanka's by 4.1pc. The only countries to grow at a slower pace than Pakistan are Bhutan, Afghanistan and Nepal. The comparison is important because it underscores the structural issues plaguing the economy - the weaknesses that we have been long aware of but done little to tackle - which take us back to the IMF for a financial bailout every few years.
Pakistan is not the only country to have experienced 'boom-and-bust' cycles. But it is certainly among those economies that have ignored deep-rooted structural issues for too long at the peril of the well-being of the citizenry. The Central African Republic, Chad, Nigeria and Afghanistan are the only countries that occupy a lower place than Pakistan among 153 nations on the Global Wellness Index. That says a lot about how our economy is faring.