Fiscal year 2023: GDP growth weighed down by tighter monetary, fiscal policies: ADB

ISLAMABAD: GDP growth in Pakistan in fiscal year 2023 (ended 30 June 2023) was weighed down by tighter monetary and fiscal policies to safeguard macroeconomic stability, pervasive inflation, and significant damage from flooding, says the Asian Development Bank (ADB).

The bank in its latest report, “Asian Development Outlook, robust growth with moderating inflation” stated that South Asia is on course to achieve ADO April 2023 growth forecasts. Downward revisions for Nepal and Pakistan in 2023 reflect mainly tighter monetary and fiscal policies and are offset by an upward revision for Bangladesh as net exports performed better than expected. Growth projections elsewhere in South Asia are largely maintained.

The report noted that GDP projections for Pakistan are adjusted down for the fiscal year 2023 and maintained for the fiscal year 2024. The ADO April 2023 projection for Pakistan in the fiscal year 2024 assumes that the government will continue reform as recommended by the IMF under a new policy-support programme approved on 12 July.

In contrast, 2023 inflation projections for Bangladesh and Nepal are revised up, and actual inflation in Pakistan in FY2023 was higher than projected, leaving the sub-regional forecast unchanged. Continued demand-side pressures in Pakistan play an outsized role in the upward revision to the sub-regional inflation forecast for 2024.

Copyright Business Recorder, 2023