According to the Asian Development Bank, Pakistan’s GDP growth rate is expected to marginally increase, while inflation would significantly increase in the current fiscal year (ADB).
The Bank reported that Pakistan had the highest inflation in the area after Sri Lanka in its most recent report, “Asian Development Outlook Supplement.”
According to the report, Pakistan’s inflation was slightly revised upward for FY22 and significantly for FY23. From 13.8 percent in May 2022, headline inflation increased to 21.3 percent in June 2022. The government’s efforts to restart the stalled International Monetary Fund (IMF) programme have resulted in higher power tariffs and the removal of subsidies in the oil and electricity sectors, in addition to the effects of raised global energy and food prices.
The Bank further stated that GDP growth in Pakistan is expected to moderate in FY22 (ended 30 June 2022) on fiscal tightening measures to manage growing demand pressures and contain external and fiscal imbalances. Growth is projected to recover slightly in FY23, supported by structural reforms.
The report stated that economic activity in Afghanistan has been severely restricted by sanctions and the ban on non-humanitarian international development aid.
It was also mentioned that the majority of the Caucasus, Central Asia, Mongolia, Pakistan, Sri Lanka, the Lao People’s Democratic Republic (Lao PDR), and Myanmar in Southeast Asia all had headline inflation rates in the double digits. India’s inflation rate stands at 7%, which is higher than the Reserve Bank of India’s goal range of 2–6%. (RBI). The large economies of the rest of developing Asia still have acceptable headline and core inflation. As a result, the region as a whole continues to experience modest inflation that is far lower than elsewhere in the world.
The report also mentioned how several central banks have begun raising interest rates in an effort to fight inflation and maintain financial stability. After Sri Lanka raised it by 950 points, the State Bank of Pakistan (SBP) increased its policy rate by 525 points between January and July.
With the Russia-Ukraine war, aggressive monetary tightening in advanced countries, and COVID-19 lockdowns in the People’s Republic of China, this supplement lowers the growth predictions for developing Asia from 5.2 percent to 4.6 percent for 2022 and from 5.3 percent to 5.2 percent for 2023. (PRC).
Due to the PRC’s growth projection being decreased to 4.0 percent and weakening global demand, East Asia’s growth prognosis for 2022 has been reduced from 4.7 percent to 3.8 percent. The economic crisis in Sri Lanka and India’s high inflation and accompanying monetary tightening are the key reasons why the growth forecasts for South Asia have been revised downward from 7.0 percent to 6.5 percent for 2022 and from 7.4 percent to 7.1 percent for 2023.
As domestic demand gains from the ongoing easing of COVID-19 mobility limitations and the reopening of borders in several economies in the subregion, the prediction for Southeast Asia for 2022 is slightly raised from 4.9 percent to 5.0 percent.
Due to several economies faring better than anticipated under the effects of the crisis in Ukraine, the growth prospects for the Caucasus and Central Asia are increased from 3.6 percent to 3.8 percent for 2022 and from 4.0 percent to 4.1 percent for 2023, respectively.
The Pacific’s growth expectations for this year have been upgraded from 3.9 percent to 4.7 percent, citing Fiji’s stronger-than-expected tourism recovery.
Due to rising fuel and food prices, the inflation prediction for developing Asia has been increased from 3.7 percent to 4.2 percent for 2022 and from 3.1 percent to 3.5 percent for 2023. However, compared to other parts of the world, the region experiences lower inflation pressures.
The pandemic has largely subsided, with the number of daily cases worldwide falling from 1.2 million when Asian Development Outlook 2022 (ADO 2022) was published in early April to 738,000 at the end of June, despite COVID-19 continuing to spread due to Omicron subvariants. In emerging Asia, where daily new cases decreased from 384,000 to 82,000 over that time, the decline was considerably more pronounced. As a result of this drop and further immunisation advancements, many economies in the region have been able to loosen COVID-19 restrictions even more.
The obvious exception to this tendency is the People’s Republic of China (PRC). In response to additional outbreaks at the beginning of 2022, it adopted a zero-COVID approach, which led to the reinstatement of tight lockdowns. In the first five months of 2022, the economies of developing Asia continued to do well on the export front.
Exports from the PRC decreased in April as a result of the lockdowns, but they have subsequently increased as the restrictions have been relaxed. Economic activity grew in the first half of 2022, with the significant exception of the PRC, as more economies in the area decided to reopen and live with the virus.