Pakistan’s economic crisis eases in 2009: ADB

[Naveed Yaseen]

* Report says fiscal, external imbalances narrowed in 2009
* Economy expected to register improvement due to rising real GDP growth

ISLAMABAD: The country’s economic crisis eased slightly in 2009, as the government’s stabilisation programme came into effect, according to a new Asian Development Bank (ADB) report.

The Asian Development Outlook (ADO) Update 2009 has forecast a two percent growth in Pakistan for 2009. The update has also forecast economic expansion in developing Asia at 3.9 percent in 2009. The ADO update notes that fiscal and external imbalances in the country narrowed in 2009, the exchange rate stabilised and foreign reserves rose. However, inflation remains high and growth slowed by the impact of power outages, tight domestic demand management, uncertain security and the global recession.

Slight improvement: The Pakistani economy, meanwhile, is expected to register a modest improvement as real GDP growth rises to three percent in 2010, but this is subject to substantial risks, the report says. “Pakistan’s economic outlook in 2010 will be shaped by both internal policies and global economic developments,” says Rune Stroem, ADB Country Director for Pakistan. “Internally, economic outcomes will depend on the government’s ability to achieve the desired balance between fiscal consolidation and revival of growth. Externally, it will depend on the degree of improvement in major trading partners, the consequent impact on Pakistan’s exports and on receipts of workers remittances and international oil prices,” he added.

The ADO Update 2009 has stressed that structural improvements in the underlying fundamentals are needed to address the key downside risks and challenges to the country’s economic outlook. Critical measures to improve revenue mobilisation are required to support large scale spending on infrastructure and social sectors, it added.

In an era of rising international oil prices, improvements to the country’s current account are crucial, the report says. It underlines the critical need for effective measures to build a much larger export base that is sufficient to finance oil, machinery and other essential imports. The report has also emphasised that both immediate and long-term measures are needed to address the power crisis. app

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