The GDP in Pakistan in FY2021 will grow by 1.3%: World Bank

In the fiscal year ending June 2021, Pakistan's GDP growth is projected to rise to 1.3 trillion, the World Bank reports (WB). Although marginally better than the January outlook, the recovery remains weak, given the absence of significant COVID-19 prediction.

The study entitled "An Economic Focus on South Asia, Spring 2021, South Asia Vaccine," stressed that over the financial year 2021 in July-February (y-o-y), headline inflation remained strong at 8.3% on average, due mainly to high food inflation.

It also forecasts inflation of 9% to 2020-21, with Pakistan's inflation remaining high at 9% for fiscal years 2021 due to the continued inflation of food supply — some associated with confinements — but also because of monsoon rain in July and August 2020 and locust bombings. The worldwide organization has projected inflation of 9% for 2020-21.

In the fiscal year 2021, the current-account deficit is expected to decline to 0.8% of GDP as broader trade deficits are more than offset by stronger cash flows. The current account deficit is projected to rise by 1.3% in 2021-22. However, it will rise over the medium term.

Total revenues in Pakistan also rose during the first six months of the 2020-21 fiscal year in line with recovering economic activity.

The study added that in fiscal 2020, the economy of Pakistan was significantly affected by the COVID-19 shock, which contributed to a rise in poverty.

Over the last two decades, Pakistan's economy has developed steadily. Just two percent of South Asia's real annual per capita growth was less than half the average, partially on account of macroeconomic incoherence and under reliance on investment and exports for economic growth. Quick bursts of rapid consumer-fueled growth also led to a large current account and fiscal deficits, resulting in recurring growth cycles.

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