Pakistan’s economic growth saw a rebound in the fiscal year 2024, which ended on June 30, driven by increased domestic consumption resulting from higher agricultural income and remittances from overseas workers, according to a report by the Asian Development Bank (ADB).
The ADB’s Asian Development Outlook (ADO) September 2024 update projected Pakistan’s gross domestic product (GDP) growth to have modestly recovered to 2.4% for FY2024, with an anticipated increase to 2.8% in FY2025, alongside a reduction in inflation. The report emphasized that continued adherence to Pakistan’s economic reform program is essential for maintaining macroeconomic stability and sustaining growth, though risks remain.
“Pakistan’s future economic outlook depends heavily on the consistent implementation of reforms aimed at stabilizing the economy and rebuilding fiscal and external reserves,” stated ADB Country Director for Pakistan, Yong Ye.
He added, “It is vital for Pakistan to continue strengthening public finances, enhancing social safety nets, addressing fiscal risks linked to state-owned enterprises, and fostering a business-friendly environment to promote private-sector-led growth.”
The ongoing implementation of the economic adjustment program is expected to foster economic activity in FY2025 by creating a more stable macroeconomic climate. However, for the economy to fully recover, private investment will require improved macroeconomic conditions, including better access to foreign currency, which would also benefit the manufacturing and services sectors. The agricultural sector, on the other hand, is predicted to slow down.
Headline inflation averaged 23.4% in FY2024, a decrease from 29.2% in FY2023. While inflation remained high in the first half of FY2024, it eased during the latter part of the fiscal year, especially in the fourth quarter. This decline was largely attributed to lower food price inflation, driven by stronger agricultural output. Inflation is projected to further decrease to 15% in FY2025, aided by sound monetary policy, reduced volatility in exchange rates, and stable global food prices.
The ADB remains committed to promoting prosperity, inclusiveness, resilience, and sustainability across Asia and the Pacific, while continuing its mission to eradicate extreme poverty. Established in 1966, the bank has 68 member countries, 49 of which are from the region.
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