Growth in the South Asian region is expected to accelerate to 7.6 per cent in 2022, while growth in Pakistan is predicted to improve at a more measured 3.4 per cent this year, according to a new report by the World Bank.
“Growth in Pakistan surprised on the upside last year supported by improving domestic demand, record-high remittance inflows, a narrow targeting of lockdowns, and accommodative monetary policy—real interest rates dropped precipitously during 2020 and remained negative throughout most of 2021,” the World Bank’s Global Economic Prospects report read.
According to the report, growth in the region will be largely driven by India and Bangladesh. India’s economy is expected to expand by 8.7% in 2022 and 6. 8 per cent in 2023. In Bangladesh, strong export growth, returning international and domestic demand for the country’s garment sector, improving labor income and remittance flows supported the country’s economy, which is expected to grow at 6.4 and 6.9 per cent in 2021-22 and 2022-23, respectively.
“In Pakistan, output is expected to grow by 3.4 per cent in FY2021/22, ending June 2022, and by 4.0 per cent the next fiscal year, benefiting from structural reforms enhancing export competitiveness and improving the financial viability of the power sector,” the report cited. Pakistan’s growth will be lower than global economic growth, which is expected to stall at 4.1 per cent this year.
The Taliban’s takeover of Kabul was reported by the World Bank to have led to an economic crisis in the country with impacts on the region, following an end to grant inflows as well as impeded access to international capital and remittances in Afghanistan.
The report also noted faltering per capita incomes in the region, with Pakistan facing the largest relative decline in per capita incomes at nearly 2 percentage points per year.