ADB revises Pakistan’s growth to 3% for FY2024-25 as compared to the earlier projection of 2.8 percent made in September last year.
The Asian Development Bank (ADB) has revised Pakistan’s growth forecast for the fiscal year 2024-25 upward to 3 percent, compared to its earlier projection of 2.8 percent in September 2024.
This positive adjustment reflects increased macroeconomic stability after Pakistan secured a new IMF program under the Extended Fund Facility in September. Industrial growth is expected to improve due to the lifting of import restrictions, heightened investor confidence, and better access to foreign exchange.
Additionally, an accommodative monetary policy, spurred by a faster-than-expected decline in inflation, is projected to boost private investment and economic activity. However, the agricultural sector faces challenges from heavy monsoon rains and flood-like conditions in parts of the country during July–September 2024, with wheat and cotton yields expected to underperform.
For FY2024, the ADB has also raised Pakistan’s growth estimate to 2.5%, aligning with the updated official figure. In South Asia, growth forecasts for 2024 have been lowered to 5.9%, mainly due to India’s weaker-than-expected Q2 performance, affected by subdued manufacturing and slower government spending. The 2025 forecast for the region has also been trimmed to 6.3%.
While Pakistan and Sri Lanka are recovering from their recent economic challenges, growth projections for Bangladesh and the Maldives have been downgraded for both 2024 and 2025. This is attributed to political unrest in Bangladesh and fiscal tightening in the Maldives. Nepal is also expected to see slower growth in 2025 compared to earlier forecasts.
For developing Asia, the growth forecast has been revised down slightly to 4.9% for 2024 and 4.8% for 2025. This adjustment reflects weaker growth in East and South Asia, which offsets stronger performance in the Caucasus, Central Asia, and Southeast Asia. The overall reduction trims 0.1 percentage points from regional growth projections.
While domestic demand and exports remain robust in much of developing Asia, their momentum has slowed. The report also discusses potential risks from significant policy changes anticipated under the new US presidential administration, although most of these impacts are expected beyond the forecast horizon.
Downside risks to growth remain, including potential shifts in US policies, escalating geopolitical tensions, and further weakening of China’s property market.
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