Pakistan’s economic growth is expected to be less than 3% over the next two years, according to the World Bank | World News | Trending Viral hub

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By Kamran Haider

Pakistan’s economic growth is expected to recover from the current fiscal year, but will remain below 3% for the next two years, according to the latest estimates from the World Bank.

The economy is expected to grow 1.8% in the current fiscal year ending June 30 and will expand to 2.3% next year and 2.7% in 2026 if there is continued fiscal consolidation and a new bailout program of the International Monetary Fund and the World Bank. said the country’s economist Sayed Murtaza Muzafarri at a briefing in Islamabad on Tuesday.

The estimates come as Pakistan’s economic growth weakened in the fiscal second quarter after record interest rates hit business activities. The South Asian country managed to avoid a sovereign default last year, but the economy remains fragile.

In an update on Pakistan’s development released the same day, the World Bank said that “political constraints to sustainable economic growth remain unaddressed.”

“Unless a major structural reform program is lastingly implemented, growth is expected to remain weak amid very low investment, persistent external imbalances, distorting fiscal policies and a large state presence in the economy,” it said. the World Bank.

Prime Minister Shehbaz Sharif, who returned to power after disputed elections in February, is seeking a new loan from the International Monetary Fund to support the economy and bolster Pakistan’s foreign exchange reserves.

The nation remains heavily dependent on IMF aid, with external financing needs of $24 billion in the fiscal year starting in July, roughly three times its foreign reserves.

Inflation is expected to average 26% in the current fiscal year and will reduce to 15% next year and 11.5% in 2026, said the World Bank’s Muzafarri. In March, Pakistan’s inflation rate slowed to 20.68%, the lowest in almost two years, as borrowing costs curbed economic growth and domestic demand.

First published: April 3, 2024 | 00:04 IS

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