ISLAMABAD –World Bank has projected that Pakistan’s economic growth rate would increase to 5 percent during ongoing financial year, which is well below the government’s target of 5.7 percent.
“Economic growth is primarily driven by public and private consumption, however some rebalancing in growth components is expected due to a rise in investments,” stated the World Bank (WB)’s report, ‘South Asia Economic Focus Fall 2016′.
Last week, the Asian Development Bank (ADB) forecasted that Pakistan’s growth would remain at around 5.2 percent during current fiscal year (FY2017).The growth rate remained 4.7 percent in last fiscal year.
In Pakistan, economic activity is projected to gradually accelerate over the medium term reaching 5.0 percent in 2017 and 5.4 percent in 2018.
The WB noted that growth would primarily be driven by infrastructure projects under the China Pakistan Economic Corridor (CPEC) and public investment.
These projects are expected to accelerate growth in the domestic construction industry and increase electricity generation.
Improved electricity availability will support growth in the industry and services sectors.The current account deficit, according to the report, is expected to widen during FY2017 and FY2018.
The key contributor to this will be a widening trade deficit due to moderate growth in exports and rapid growth in CPEC related imports.
However, continuous growth in remittances and financial flows will help in financing the current account deficit.The fiscal deficit is projected to be 4.2 percent in FY2017 and 4.0 percent in FY2018.
This improvement in fiscal accounts hinges upon the government’s will to persist with the fiscal consolidation through revenue mobilization efforts and expenditure rationalization.Increased economic activity, and marginal rise in global oil prices are expected to increase domestic prices, with inflation projected to increase from 2.9 percent in FY2016 to 4.6 percent in FY2017 and 5.0 percent by FY2018.