Pakistan outlook positive, says ADB

ISLAMABAD — Pakistan’s economy will continue to pick up in fiscal year 2016 as reform and stabilisation measures provide a lift, with higher foreign exchange reserves, and softer inflation and oil prices also supporting the overall macroeconomic outlook, says the Asian Development Bank (ADB) in its latest flagship annual economic report.

The Asian Development Outlook (ADO) 2016, released on Wednesday, forecast growth of 4.5 per cent for FY 2016 and 4.8 per cent in FY 2017. In FY 2015, growth came in at 4.2 per cent.

While the outlook is for moderate gains in growth, the report also notes that continued public sector enterprise losses, insufficient energy and power evacuation capacity, and security concerns will continue to test the country’s economy.

“Pakistan needs to stay the course of macroeconomic and structural reforms, in particular in revenue collection, the energy sector, and in revitalising public sector enterprises that have been causing a fiscal drain,” said Werner Liepach, ADB’s Country Director for Pakistan. “These reforms are critical for fiscal and economic sustainability and to promote investment and economic growth.”

The ADO notes that large scale manufacturing grew 3.9 per cent in the first half of FY 2016 from a rise of 2.7 per cent in the same period the year earlier, boosted by low raw material prices, expanded construction, and low interest rates. However, textile production grew by only one per cent over the same period due to weaker demand in export markets and increased competition, with falling global commodity prices and heavy rains.