GDP Growth To Slow Down To 3.5-4.0 Percent. Inflation On The Rise: SBP
The State Bank of Pakistan (SBP) said that Pakistan’s economic growth is set to slow down to between 3.5-4.0 percent in 2019 fiscal year from 5.2 percent in 2018.
According to Reuters, the Pakistan Tehreek-e-Insaf (PTI) government is targeting a 6.2 percent increase in GDP, but several economists believe that the growth would slow down in the coming months.
“Real GDP growth during FY19 is likely to moderate significantly, mainly due to slowdown in the growth of the agriculture sector and stabilization measures taken to preserve macroeconomic stability,” the SBP said.
SBP said that “monetary policy tightening, exchange rate adjustments, reduction in PSDP spending and regulatory measures” have greatly affected domestic economic activity. The central bank added that underperformance of major Kharif crops in Pakistan has also made the situation worse.
Inflation also continued to increase mainly due to cost factors and some persistence in underlying demand. The rise was noted at 6.5 percent in the second quarter of the current fiscal year.
The report said that this was largely because non-food, non-energy (NFNE) component was affected by depreciation in exchange rate and high prices of oil products.
Fiscal deficit also remained high, the report said. “Persisting high level of fiscal deficit continued to undermine efforts to contain domestic demand.”.