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ADB Revises Pakistan’s Growth Forecast to 3% for FY25
ADB upgrades Pakistan's FY25 growth forecast to 3%, citing IMF support and easing inflation. Agriculture faces challenges due to heavy monsoons.
ND
by News Desk
2024-12-11
ADB Revises Pakistan’s Growth Forecast to 3% for FY25

The Asian Development Bank (ADB) on Wednesday revised its forecast for Pakistan’s economic growth in the fiscal year 2025 (FY25), projecting it at 3%, up from the earlier estimate of 2.8% issued in September.

In its latest Asian Development Outlook (ADO) report, the ADB attributed the slight upward revision to macroeconomic stability, bolstered by the $7 billion International Monetary Fund (IMF) Extended Fund Facility approved in September.

The report highlighted improvements in industrial output, investor confidence, and foreign exchange availability following the suspension of import management measures. It also projected that a more accommodative monetary policy, driven by faster-than-expected easing of inflationary pressures, would support economic recovery.

Sectoral Insights

  • Industry: Growth in industrial output is expected to accelerate, buoyed by increased access to foreign exchange and higher investor confidence.
  • Agriculture: Challenges persist as heavy monsoon rains during July-September 2024 caused flood-like conditions, potentially undermining wheat and cotton yields.
  • Inflation: The inflation forecast for FY25 has been revised downwards to 10%, from 15% in September, reflecting improved food supplies, favorable global commodity prices, and subdued demand pressures.

Broader Regional Impact

For South Asia, the ADB revised the growth outlook downward. While Pakistan and Sri Lanka’s economic recoveries prompted upgrades, the effects of political unrest in Bangladesh and fiscal consolidation measures in the Maldives weighed on the overall regional forecast.

The report also noted potential future impacts on Asia and the Pacific from expected US policy changes under President-elect Donald Trump, particularly regarding trade, tariffs, and fiscal policies. ADB Chief Economist Albert Park warned that these could slow regional growth and increase inflation.

ADB's Additional Support to Pakistan

In a separate announcement, the ADB approved $330 million in additional financing to strengthen Pakistan’s federally administered social protection programmes under the Integrated Social Protection Development Program (ISPDP).

The programme focuses on:

  • Expanding grassroots social protection services.
  • Enhancing institutional capacity to transition to climate-resilient social protection systems.
  • Increasing access to education and healthcare for vulnerable families.

ADB Director General for Central and West Asia Yevgeniy Zhukov underscored the programme’s importance, stating, “ADB’s additional financing will help boost the government’s ability to reach more of the poorest and most vulnerable in Pakistan.”

Challenges and Opportunities

While the revised growth projection and additional financing are promising, challenges remain, particularly in agriculture and trade. The successful implementation of reforms and effective utilization of financial support will be critical to sustaining economic recovery and addressing poverty.
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