ISLAMABAD, (APP): Pakistan’s economy will
continue to pick up in fiscal year (FY) 2016 as reform and
stabilization measures provide a lift, with higher foreign
exchange reserves, and softer inflation and oil prices also
supporting the overall macroeconomic outlook, says the Asian
Development Bank (ADB) in its latest flagship annual economic
report.
The Asian Development Outlook 2016 (ADO), released
Thursday, forecast growth of 4.5% for FY 2016 and 4.8% in
FY2017. In FY2015, growth came in at 4.2%.
“While the outlook is for moderate gains in growth, the
report also notes that continued public sector enterprise
losses, insufficient energy and power evacuation capacity, and
security concerns will continue to test the country’s
economy”, the ADB outlook on Pakistan observed.
“Pakistan needs to stay the course of macroeconomic and
structural reforms, in particular in revenue collection, the
energy sector, and in revitalizing public sector enterprises
that have been causing a fiscal drain,” said Werner Liepach,
ADB’s Country Director for Pakistan.
“These reforms are critical for fiscal and economic
sustainability and to promote investment and economic
growth.”, he remarked.
The ADO notes that large scale manufacturing grew by
3.9% in the first half of FY2016 from a rise of 2.7% in the
same period the year earlier, boosted by low raw material
prices, expanded construction, and low interest rates.
However, textile production grew by only 1% over the
same period due to weaker demand in export markets and
increased competition, with falling global commodity prices
and heavy rains damaging cotton output, Pakistan’s vital
agriculture sector is expected to experience slower growth in
FY2016.
The ADB Outlook further said that the key challenges
impeding stronger economic growth include inadequate
infrastructure and transport connectivity,and limited access
to finance.
“Low investment in human development has also left
Pakistan with a workforce lacking the skills needed to help
the country compete in global markets and to increase
productivity by producing goods with higher value”, the report
says.
It added that improved prospects for the economy,
therefore, depend on faster implementation of ongoing reforms
to alleviate power shortages, expanding fiscal space,
fostering a competitive business environment, and liberalizing
trade.
The ADB ADO noted that ongoing and planned investments
under the flagship economic corridor between Pakistan and the
People’s Republic of China, as well as other regional
cooperation initiatives, are spurring development activity and
some market optimism.
Sustained economic reforms and an improvement in the
security environment should further boost business confidence
and foster increased private investment, the ADB said.
The ADB, based in Manila, is dedicated to reducing
poverty in Asia and the Pacific through inclusive economic
growth, environmentally sustainable growth, and regional
integration. Established in 1966, it is owned by 67 members-48
from the region.