The World Bank (WB) has released a report on Pakistan’s economy, stating that the country’s economy continues to stabilise and is expected to grow by 2.7 percent in the current fiscal (2024-25).
According to the report, the interest rate has also been reduced due to decline in inflation.
“The confidence of global investors in Pakistan’s economy has been restored, with a projected economic growth rate of 2.7 percent for the current fiscal year, up from 2.5percent in the previous fiscal year,” the WB’s report read.
Pakistan’s growth rate is expected to be 3.1 percent in the next fiscal year, while 3.4 percent in 2027, according to the WB’s report.
The World Bank; however, warned that Pakistan’s economy cannot afford delays in structural reforms. The report also identified key challenges for Pakistan’s economy including the increasing debt burden, uncertain global trade conditions, and the impacts of climate change.
It cautioned that Pakistan’s growing debt burden is the biggest challenge while uncertain global trade conditions and effects of climate change also pose challenges for the country’s economy.
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World Bank Country Director for Pakistan Najy Benhassine said that Pakistan’s key challenge is to transform recent gains from stabilisation into economic growth that is sustainable and adequate for poverty reduction.
“High-impact reforms to prioritize an efficient and progressive tax system, support a market-determined exchange rate, reduce import tariffs to boost exports, improve the business environment and streamline the public sector would signal strong reform commitment, build confidence, and attract investment,” he added.
Anna Twum, lead author of the report said, “Pakistan’s economy has turned the corner and stabilized. Yet, the economic outlook remains fragile and any implementation delays in structural reforms or shifts in economic stabilisation could dampen the nascent recovery and intensify external pressures.”
“Risks remain high due to elevated debt levels, policy and global trade uncertainties, and exposure to climatic shocks,” the report’s author added.
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