Connect with us

Business

WB cuts Pakistan’s GDP forecast on rising rates, limited fiscal space

Published

on

  • World Bank expects economy to grow 0.4% in current year.
  • Bleaker forecast assumes agreement is reached with IMF.
  • World  Bank lowers regional growth forecast to 5.6%.

The World Bank sharply lowered Pakistan’s current-year growth forecast, saying the country’s economic growth prospects have weakened due to tighter financial conditions and limited fiscal space.

The World Bank now expects Pakistan’s economy to grow 0.4% in the current year, from its October forecast of 2% growth. The bleaker forecast assumes an agreement is reached with the International Monetary Fund for bailout funds, it said.

Pakistan’s fiscal year starts in July and runs through June. Pakistan expects its economy to grow 2% in FY23, however, the country’s central bank chief said in January the growth forecast could face downward pressure.

The South Asian nation has been in economic turmoil for months with an acute balance of payments crisis while talks with the IMF to secure $1.1 billion in funding as part of a $6.5 billion bailout agreed upon in 2019 have not yet yielded fruit.

Lower economic output and high prices in Pakistan have led to stampedes and looting at flour distribution centres set up across the country.

“Elevated global and domestic food prices are contributing to greater food insecurity for South Asia’s poor who spend a larger share of income on food,” the bank said.

The World Bank lowered its 2023 regional growth forecast to 5.6% from 6.1% in October.

“Rising interest rates and uncertainty in financial markets are putting downward pressure on the region’s economies,” the report said.

Most countries have raised interest rates at a rapid pace since the war in Ukraine last year led to choking supply chains and stoked inflation globally.

The World Bank forecast Sri Lanka’s economy will contract by 4.3% this year, reflecting the lasting impact of the macro debt crisis, with future growth prospects heavily dependent on debt restructuring and structural reforms.

Sri Lanka follows the calendar year. In January, President Ranil Wickremesinghe said Sri Lanka’s economy could contract by 3.5% or 4.0% in 2023 after shrinking by 11% last year.

Inflation in South Asia is set to fall to 8.9% this year, and to below 7% in 2024, the World Bank said.

The World Bank also lowered its forecast for India’s economic growth in the current fiscal year that started on April 1 to 6.3% from 6.6% as it expects higher borrowing costs to hurt consumption.

Business

The gold price in Pakistan today

Published

on

By

According to the All Sindh Sarafa Jewellers Association, the price of 10 grammes of 24 karat gold increased by Rs772 to Rs184,928 from Rs184,156, while the price of 10 grammes of 22 carat gold increased to Rs169,517 from Rs168,810.

These oscillations are strongly correlated with shifts in the US dollar’s value, demonstrating the complex interplay between gold prices and exchange rates.

This emphasises how local gold prices are impacted by events related to the global economy.

On the other hand, the cost of 24-karat silver was constant at Rs 2,570. Globally, too, the price of gold increased somewhat by $9 to $2,057 per ounce.

Continue Reading

Business

Pakistan receives a $2 billion loan from China, according to the finance minister

Published

on

By

The $2 billion loan was one year ahead of schedule and became due in March. According to reports, Beijing had informed Islamabad of the decision.

The International Monetary Fund granted Pakistan’s cash-strapped economy a $3 billion standby arrangement last summer, but the country is still battling to recover from the financial crisis.

According to ratings firm Fitch, one of the top concerns confronting the next administration would be obtaining funding from bilateral and multilateral partners due to Pakistan’s precarious foreign situation, as was stated last week.

This event occurs one month after Anwaar-ul-Haq Kakar, the acting prime minister, asked for a $2 billion loan to be rolled over for a year in a letter to his Chinese counterpart.

In his letter, Kakar also expressed gratitude for China’s efforts to lessen Pakistan’s load

of foreign payments.

It is to be noted that Pakistan acquired safe deposits of $4 billion from China to address the balance of payments issue.

Continue Reading

Business

“Ready to work with Pakistan’s new government,” the IMF said.

Published

on

By

In response to the former premier’s request, IMF Director of Communications Julie Kozak stated, “I’m not going to comment on ongoing political developments,” during a news conference.

She continued by saying that they “look forward to working on policies to ensure macroeconomic stability and prosperity for all of Pakistan’s citizens with the new government.”

In addition to stating that the plan is “supporting the authority’s efforts to stabilise the economy and to, of course, with a strong focus on protecting the most vulnerable,” Kozack said the lender increased the total disbursements under the Standby Arrangement (SBA) to $1.9 billion.

This has been accomplished by closely adhering to budgetary constraints and safeguarding the social safety net. In order to keep foreign exchange reserves growing and rein in inflation, a strict monetary policy stance has been maintained, the speaker stated.

The PTI founding chairman decided to write a letter to the international lender, asking it to demand an audit of the election held on February 8 before it proceeds with discussions with Islamabad for a new loan programme. This move prompted the IMF to release its statement.

In response to the former premier’s request, IMF Director of Communications Julie Kozak stated, “I’m not going to comment on ongoing political developments,” during a news conference.

She continued by saying that they “look forward to working on policies to ensure macroeconomic stability and prosperity for all of Pakistan’s citizens with the new government.”

In addition to stating that the plan is “supporting the authority’s efforts to stabilise the economy and to, of course, with a strong focus on protecting the most vulnerable,” Kozack said the lender increased the total disbursements under the Standby Arrangement (SBA) to $1.9 billion.

This has been accomplished by closely adhering to budgetary constraints and safeguarding the social safety net. In order to keep foreign exchange reserves growing and rein in inflation, a strict monetary policy stance has been maintained, the speaker stated.

The PTI founding chairman decided to write a letter to the international lender, asking it to demand an audit of the election held on February 8 before it proceeds with discussions with Islamabad for a new loan programme. This move prompted the IMF to release its statement.

Continue Reading

Trending