ISLAMABAD (8th October, 2020): The World Bank has reportedly forecast economic recession and rise in poverty across Pakistan, over a period of two years.
According to reports, the World Bank in its report in the South Asia Economic Focus said “economic growth is projected to remain below potential”. According to the report specific to Pakistan, World Bank stated that the economic growth is expected to remain low at almost 1.3 percent for fiscal year 2021-2022.
World Bank’s Voce President for South Asia, Hartwig Schafer said, “The collapse of South Asian economies during Covid-19 has been more brutal than anticipated”. Schafer added that the worst of all are the small business who have had to suffer through a loss of jobs and/or income. In response to a question, Schafer added that the World Bank has not published the poverty numbers for Pakistan due to “technical reasons” however, is undoubtedly high as is the case with other countries in the region.
Based on the report, Pakistan’s economy has been one of most severely hit by the pandemic, COVID-19 since economic activity has been limited and poverty is likely to rise in FY20. While growth is expected, it is likely to remain gradual and somewhat muted, due to the uncertainty of demand. Moreover, fears of a possible second-wave and the damage to agriculture, caused by the locusts and heavy monsoon rains, has further posed a major risk to the country.
It is to be noted that the report stressed the prediction that South Asia is set to plunge into recession with devastating impacts of COVID-19 in the region. Hartwig Schafer further said that provision of relief is also dulled due to the pandemic, however, governments should address the vulnerabilities of the informal sectors by strategizing and introducing smart policies, as well as allocating the limited resources wisely.
World Bank’s report further highlighted that the GDP growth of Pakistan is estimated to have declined to 1.5pc in FY20, because of the effects of COVID-19 that forced a monetary and fiscal tightening in the early stages of the outbreak. Although the domestic economic activity is expected to recover, Pakistan’s economic prospects in the near future are set to be subdued. The report further suggested measures to enable curbing of imbalances and unfavorable conditions which are all contributing factors of the economic decline.
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