Pakistan's economic outlook improves with slowdown in inflation: ADP

Despite political uncertainty in Pakistan, the Asian Development Bank (ADB) on Wednesday said the country’s economic outlook is turning towards certainty and stability in fiscal year 2024-25.

In its September 2024 ‘Asian Development Outlook’, the bank said Pakistan’s economic growth returned to track in the fiscal year 2024, which ended on June 30, with the help of increased agriculture income and worker remittances. 

The outlook stated that Pakistan's gross domestic product (GDP) is expected to recover to “2.4 percent in FY2024 and should grow further by 2.8 percent in FY2025, accompanied by a decline in inflation.”

It added that the country has to adhere to “economic reform programmes that will be critical to strengthening macroeconomic stability and the continued recovery of growth, even as downside risks remain.”

“Pakistan’s economic prospects are closely tied to the steadfast and consistent implementation of policy reforms to stabilise the economy and rebuild fiscal and external buffers,” said ADB Country Director for Pakistan Yong Ye.

In 2025, the implementation of the economic reform would support commercial activities by providing a stable macroeconomic environment, stated the report. 

Nevertheless, Pakistan is required more to create favourable conditions for investors, such as easing access to foreign exchange, to attract private investment; it would also benefit manufacturing and services.

The report also forecasted a slowdown in average headline inflation to “15% in FY2025 due to the implementation of a well-regulated monetary policy.” 

Following the first half of FY2024, the headline inflation rate in Pakistan stands at 23.4 percent after declining from 29.2% in FY2023.