NEW DELHI (Reuters) – 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 from 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 funding as part of a $6.5 billion bailout agreed 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.
