- A useful monetary policy to support economic activity: report.
- Forecasts weaken agricultural growth due to heavy rains.
- Wheat and Cotton Expected to Perform Poorly in FY2025.
ISLAMABAD: The Asian Development Bank (ADB), in its recent publication, has revised Pakistan’s growth forecast to 3.0 per cent in the financial year 2024-25, from the previous figure of 2.8 per cent forecast in September 2024.
Greater macroeconomic stability, following the approval of the International Monetary Fund’s (IMF) new program under the Expanded Financing Facility, will support the recovery, the report said.
It further says that industrial production growth is expected to accelerate thanks to the suspension of import management measures, greater investor confidence and easier access to foreign exchange.
A more accommodative monetary policy due to a faster than expected easing of inflationary pressures should further support economic activity thanks to the rebound in private investment.
However, growth in the agricultural sector is expected to weaken due to heavy monsoon rains from July to September 2024 and flood-like conditions in parts of the country.
Wheat and cotton, two of the country’s top five crops, are expected to perform poorly in FY25.
The December 2024 Asian Development Outlook (ADO) also revised growth for FY2024 upward to 2.5%, in line with the updated official estimate.
In South Asia, growth forecasts were revised downward to 5.9% for 2024 and 6.3% for 2025. The lower forecast for 2024 is mainly due to weaker than expected growth in India in the second quarter, driven by weaker performance in the manufacturing sector and lagging growth. government spending.
While growth forecasts for Pakistan and Sri Lanka were revised upwards due to recovery from the macroeconomic challenges of 2022-2023, downward revisions for Bangladesh and the Maldives further weighed on the outlook for 2024.
Growth forecasts for the latter two economies are also revised downward for 2025 due to the lingering effects of the July-August 2024 political unrest in Bangladesh and fiscal consolidation measures in the Maldives.
Some weakening of growth is also expected for 2025 in Nepal compared to earlier forecasts.
Growth forecasts, the report adds, for developing Asia are reduced to 4.9% for 2024 and 4.8% for 2025. Most of the adjustments made to the 2024 growth projections for economies and sub-regions individual regions are based on recent data.
Downward revisions for East Asia and South Asia offset stronger growth in the Caucasus, Central Asia and Southeast Asia, reducing growth by 0.1%. of the region.
For 2025, a slowdown in growth is expected in South Asia due to weaker domestic demand prospects. At the same time, growth in developing Asia remains strong, but the new US administration promises significant changes.
Domestic demand remains strong across much of the region and exports continue to support growth, although momentum has moderated.
The new Trump administration promises significant policy changes with implications for the region, as discussed in this report’s special theme.
Most of the impact will be felt beyond the forecast horizon of this ADO. However, even though growth projections for 2024-2025 remain largely unchanged from September, downside risks persist and include faster and larger U.S. policy changes than currently envisaged, worsening geopolitical tensions and a Chinese real estate market even weaker.