Structural reforms needed to revive Pakistan economy: WB

islamabad — The World Bank in its recent report has said that structural reforms can revive Pakistan’s economic growth, which is expected to reach 4 per cent in financial year 2021.

“As macroeconomic conditions improve, and a package of structural reforms in fiscal management and competitiveness is implemented, growth is expected to recover to 4.0 per cent in FY21,” said the report.

The report on twice-a-year regional economic update predicted that Pakistan’s economic growth will decelerate to 3.4% in financial year 2019 and 2.7% in financial year 2020, as fiscal and monetary policies are tightened to address macroeconomic imbalances.

It said, domestic demand is expected to contract while at the same time export growth will be gradual.

On the supply side, services growth, which has been leading

growth in the past, is projected to decline to 4.4 per cent in FY19 compared to 6.4 per cent in FY18. The agriculture and industrial sectors will also grow significantly lower in FY19 and FY20. Growth is expected to recover to 4 per cent in FY21 as structural reforms take effect and macroeconomic conditions improve, the report added.

Remittances flows are likely to support the current account balance next year. A more stable external environment will also support a pickup in economic activity starting from FY21.

The trade deficit is projected to remain elevated during FY19, but will narrow in FY20 and FY21 as the impacts of currency depreciation, domestic demand compression, and other regulatory measures to curb imports set in.

“Pakistan’s growth must be driven by investment and productivity, which will put an end to the boom and bust cycles that affect the country every few years,” said Illango Patchamuthu, World Bank Country Director for Pakistan.

“It is entirely possible for Pakistan to transform its regulatory environment and reduce the cost of doing business,” Patchamuthu added, —