Islamabad: The World Bank released its Global Economic Prospects report that has projected a gloomy picture of Pakistan’s economy. According to the report, by next fiscal year, the economy of Pakistan would grow by 2 per cent, which is contrary to the target set by National Economic Council of 3.5 per cent.
The report stated that Pakistan would have overall depressed activity as it is still facing the effects of August 2022 floods. In addition to that, political uncertainty and the poor condition of foreign exchange reserves have caused trouble in the payment of food imports, intermediate inputs, and energy.
Regarding the Pakistan rupee, the report said that the local currency has depreciated by 20 per cent since beginning of the year because of increased exchange rate flexibility. The government raised the exchange rate due to stagnant remittances and the poor situation of foreign reserves. As a result, consumer price inflation reached its highest level since 1970 at 38 per cent.
It further added that World Bank demands Pakistan to increase the policy rates, which is at 21 per cent, because the real interest rates turned up negative as a result of the policy rate increase not matching up with the pace of expected inflation.
For the region comprising Pakistan, Afghanistan and Sri Lanka, the report said that a downward trend would prevail due to severe economical pressure.