Islamabad: According to a report released on Wednesday by the Asian Development Bank (ADB), Pakistan’s economic growth will pick up this year before picking up in 2022 as business activity gradually resumes following the coronavirus disease (Covid-19) pandemic.
Pakistan’s economy will expand by 2% in 2021, according to the Asian Development Outlook (ADO) 2021, the ADB’s annual flagship economic publication, as Covid-19 constraints are eased. With increased demand and investor trust, growth is expected to accelerate to 4% in 2022 if the Covid-19 vaccine rollout is efficient and economic stabilization steps are introduced.
ADB Acting Country Director for Pakistan F Cleo Kawawaki said “It is vital for Pakistan to continue to combat the pandemic by rapidly deploying vaccines and continuing with reforms to support economic recovery, including strengthening social protection and supporting the private sector,”
Manufacturing and construction tend to be leading the way for industry development in FY2021. As retail and trade pick up, services are expected to recover. Agriculture is expected to grow at a slower rate, owing to a lower cotton harvest as a result of heavy rains, insect attacks, and continued contractions in cultivated land.
Inflation is expected to fall to 8.7% in FY2021, thanks to expected improvements in the food supply, wheat and sugar subsidies, and tighter price control of essential commodities.
The central bank, the State Bank of Pakistan (SBP), kept its policy rate at 7% to help the economy recover. As global confidence improves and the International Monetary Fund’s stabilization program progresses, investment is expected to increase.
Strong support for small and medium-sized enterprises (SMEs) is required, according to the study, to promote growth and ensure employment for young people entering the workforce. To promote the transition of informal SMEs into the formal sector, licensing and registration procedures must be streamlined. They will also be able to gain access to financial services and export markets as a result of digitization.