World Bank report rejects govt claim of 5% growth rate this year

ISLAMABAD (92 News) – A World Bank report has rejected the government claim of achieving the growth rate of 5% this year.

The Global Economic Prospects has predicted that Pakistan's growth rate will remain at 3.4 percent this year. The country's growth rate will remain at four percent next year.

According to the report, global economic growth will decrease sharply to 4.1% in 2022 and 3.2% in 2023, from 5.5% in 2021. It also flagged the risks posed by rising inflation and growing inequality.

It noted that, after having recovered in 2021, global economy is headed towards 'pronounced slowdown', because of new Covid-19 variants, increasing inflation, debt and income inequality, reducing fiscal and monetary support and decreasing demand.

Rapid spread of the Omicron variant shows that the Covid-19 pandemic is likely to disrupt economic activity. Furthermore, deceleration in major economies including United States and China, will weigh on external demand in emerging and developing economies.

Report notes that, at this time when governments across many developing economies lack policy space for supporting activity if needed, new Covid-19 outbreaks, inflationary pressure and supply-chain bottlenecks could increase the risk of a hard landing.

The report flags risks specific to South Asia because emergence of Omicron is likely to hinder economic activity with mobility restrictions and lower external demand. Upward price pressures are expected to increase the inflation. The region is vulnerable to several factors including climate change because of: worsening domestic financing conditions, eroding real incomes and weakening financial sector.

The region is also vulnerable to climate-induced increases in poverty, food prices, disease and child mortality.