ADB forecasts 2pc growth

The thing about projections like the Asian Development Bank’s (ADB), which expects Pakistan’s economy to rebound yet grow among the slowest in the region at about two percent in this fiscal year, is that the analyses and predictions come with all sorts of conditions without meeting which even the meagre gains might not materialise. Just like this time the Manila-based lender is pretty upbeat about Pakistan’s growth prospects in the ongoing fiscal year, but only if all the troubles from the coronavirus do not come back, other economies also reopen and the recent hiccups regarding exports and remittances go away. Now, since everybody knows that is not going to happen just by weaving a magic want, and both forms of inflows require time to be put right, it seems the best we can really hope for this year is pretty strong headwinds despite the decent recovery so far.

ABD is also hoping that the negotiations with the International Monetary Fund (IMF) get back on track very quickly. And since, going by all the reports in the press, the talks are stalled for the moment because of disagreements stemming from problems related to revenue and deficit figures, exactly the troubles that the pandemic has caused, perhaps this was the Bank’s way of saying that the road ahead is still very bumpy and even if it is travelled very carefully it would just fetch two percent growth, which by all expectations is going to be among the lowest in the region.

Yet the continent is rebounding very strongly because it is being led by ferocious growth in China. Beijing’s stellar recovery has already changed the face of the struggling region because its massive spending program has triggered demand for its own export products as well as commodities which are the life and blood of international trade. This flurry of activity has impacted everything all the way to the mighty US dollar as the yuan has squeezed a lot out of the sole superpower’s currency over the last couple of months. Pakistan should take better advantage of this historic turnaround. The China Pakistan Economic Corridor (CPEC) gives it precious access to China’s funding markets. Perhaps Islamabad could make the case that the pressure from the existing, unexpected situation has forced it to seek softer terms at least in the immediate term. That could lessen some pressure on the IMF front and help Pakistan get back to the bailout program without further delay. Either way, projections of international institutions are always helpful and finding one’s own way in the complex world of international finance. *

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