IMF acknowledges Pakistan's strong growth

WASHINGTON: “The International Monetary Fund has acknowledged Pakistan's strong GDP growth due to improved energy supply and strong credit growth.”

In its latest Regional Economic Outlook, IMF also said that additional efforts are also being made by the Middle East, North Africa, Afghanistan and Pakistan (MENAP) countries to bolster the business environment.

"Improved energy supply, investment related to the China-Pakistan Economic Corridor, and strong credit growth helped to raise Pakistan's growth to an estimated 5.6 percent in FY2018, from 5.3 last year, the IMF report noted but projected the growth to moderate to 4.7 percent in FY2019.

The report also noted that upcoming elections in Pakistan, Lebanon, Mauritania and Tunisia and a more challenging political environment could slow the reform process.

Stronger prospects for the euro area should benefit the Middle East, North Africa, Afghanistan, and Pakistan (MENAP) region, especially oil importers, through higher exports. The region should also benefit from a marginal strengthening of the outlook for China, a key partner for the region.

According to the recent project, following three years of decline, exports of MENAP oil-importing countries that included Pakistan grew by 6.4 percent in 2017 and are projected to accelerate by 8.4 percent in 2018 and 8.6 percent in 2019.

"This largely reflects improved external demand, greater exchange rate flexibility (Egypt, Pakistan, Tunisia), gains in competitiveness (Morocco, Tunisia), and a pickup in the prices of phosphates (Morocco, Tunisia), metals (Mauritania), and cotton (Pakistan)."

In spite of higher oil prices relative to 2017, which posted strong growth in the second half, import growth is projected to slow to 4.8 percent in 2018 from 6.8 percent in 2017 and remain broadly steady around 5.5 percent over the medium term. This import compression partly reflects an anticipated slowdown in capital imports for infrastructure projects in Pakistan, Djibouti and Mauritania.

Following three years of decline, exports of MENAP oil-importing countries, including Pakistan, grew by 6.4 percent in 2017 and are projected to accelerate by 8.4 percent in 2018 and 8.6 percent in 2019. This largely reflects improved external demand, greater exchange rate flexibility in Pakistan, Egypt and Tunisia and gains in competitive is some other regional countries. Exports in Pakistan also posted growth due to pickup in prices of cotton, the report said.

The report said that to enhance resilience, the authorities need to continue to strengthen regulatory and supervisory frameworks in Djibouti, Mauritania, insolvency and bankruptcy regimes and Egypt, Jordan, Morocco, Tunisia, and in some cases deposit insurance arrangements in Egypt and Pakistan.

Overall, the global growth continued to strengthen in the second half of 2017 and is now estimated at 3.8 percent for the full year, the highest level since 2011 and 0.2 percentage point stronger than forecast in the October 2017 World Economic Outlook.