There was some ‘good’ news on the economic front as the World Bank left its growth forecast for Pakistan unchanged at 3.4%. However, that number is still significantly lower than the already subpar government forecast of 4.8%. It is also one of the lowest in South Asia and well below the global growth rate forecast of 4.1% overall and 4.6% for developing countries. Also notable is that the World Bank appears to have rejected Pakistan’s 4% growth rate figure for last year, instead offering its own estimate of 3.5%.
The bank’s forecast was published in its latest Global Economic Prospects report, which also noted that growth prospects for advanced and developing economies alike will slow as the year progresses. Pakistan’s finance ministry, however, recently one-upped itself by projecting that despite double-digit inflation the country will exceed the 4.8% target. This optimistic projection was undercut by the PM’s Economic Strategy Group, which projected growth at around 4.5% for the current fiscal year, one of the first admissions that the target will be missed.
Either way, the main concern should be the gloomy outlook given by the Pakistan Institute of Development Economics (PIDE). The top research institute recently said the country needs to maintain an average growth rate of over 7% over the next few decades just to absorb the massive youth population, which faces increasing risks of unemployment and underemployment. According to a PIDE paper, almost one-third of degree holders are currently unemployed, and nearly a quarter of the workforce is engaged in unpaid labour.
We must also note that Pakistan’s growth rate has only exceeded 7% twice since 1990, the last time coming in 2004. Meanwhile, medium-term forecasts for Pakistan’s economy also remain bleak, at least in the context of that 7% figure. The World Bank’s prediction for Pakistan in the next fiscal year is just 4%, and longer-term forecasts from other independent sources also barely ever crack 5%. Growth policies, it seems, are beyond the capacity of all of Pakistan’s political parties.
Published in The Express Tribune, January 19th, 2022.