More bad news for Pakistan as for the fiscal year 2022–2023, the World Bank forecasted a growth rate of 2% for Pakistan, which is a 2% decrease from its earlier estimates from April and June 2022.
The global agency increased the prediction for Pakistan for FY23–24 to 3.2% in its report.
The bank stated in a statement that “the slower growth will reflect damages and interruptions caused by catastrophic floods, a tight monetary stance, high inflation, and a less favorable global environment.” Real GDP growth is anticipated to reach 3.2 percent in fiscal year 2024. The recovery will be sluggish.
According to the World Bank, the recent flooding will probably have made poverty in the hardest-hit areas worse.
Without prompt relief and rehabilitation initiatives to assist the poor, preliminary projections indicate that the national poverty rate may rise by 2.5 to 4 percentage points, trapping between 5.8 and 9 million people in poverty, according to the statement.
Read more: Pakistan’s GDP grew faster than set target according to Pakistan Economic Survey
The World Bank also predicted that the average growth rate for the South Asian region would be 5.8% this year, which is a 1% reduction from the prediction issued in June. This came after 2021’s growth of 7.8%, when the most of nations were recovering from the pandemic downturn.
In addition to the ongoing effects of the Covid-19 pandemic, South Asia is currently dealing with an unprecedented confluence of shocks due to the economic crisis in Sri Lanka, the devastating floods in Pakistan, the global downturn, and the effects of the conflict in Ukraine. In its twice-yearly update, the World Bank notes that the region’s growth is slowing down and emphasizes the need for nations to strengthen their resilience.
MOODY’S cuts Pakistan’s rating to CAA1
On the other hand, following the disastrous floods that struck the nation earlier this year, Moody’s on Thursday lowered Pakistan’s sovereign credit rating by one notch, from B3 to Caa1, citing higher government liquidity and external vulnerability risks.
Massive areas of Pakistan have been drowned by the floods, which were brought on by unusual monsoon rains and glacier melt, and about 1,700 people have died, the majority of them women and children.
According to the rating agency, the floods will increase Pakistan’s need for external financing, increasing the likelihood of a balance of payments crisis.
Meanwhile, the outlook for Pakistan by Moody’s remained negative.
In the near future, Moody’s anticipates that Pakistan’s Extended Fund Facility (EFF) program with the IMF will continue to operate and offer a channel for funding from the IMF and other multilateral and bilateral partners.
