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ADB Report: Pakistan’s Economy Grapples with Instability Amidst Potential Middle East Conflicts

In a recent report published by the Asian Development Bank (ADB) on Thursday, concerns over Pakistan’s economic future have been raised, citing political instability and looming disruptions from conflicts in the Middle East as significant factors.

ADB Report: Pakistan's Economy Grapples with Instability Amidst Potential Middle East Conflicts

The report emphasizes Pakistan’s reliance on external financing, underscoring the critical importance of effective policy implementation. ADB has urged for International Monetary Fund (IMF) support to implement reforms aimed at bolstering market confidence and attracting affordable financing.

Despite the challenges, the report projects a modest economic growth of 2.8% for the fiscal year 2025, driven by confidence-building measures, ongoing reforms, and improved stability. However, growth is anticipated to remain sluggish for fiscal year 2024, with prospects for improvement contingent upon the implementation of reforms.

Inflation remains a pressing concern, with projections indicating a rate of 25 percent for 2024, largely attributed to energy price fluctuations. However, there is optimism for a gradual easing of inflation in 2025, supported by potential improvements in food supply and stabilization of energy prices.

ADB also highlights the anticipated growth in key sectors such as agriculture and manufacturing, despite the prevailing challenges. However, the relaxation of import restrictions and ongoing economic recovery efforts may lead to a widening of the current account deficit to 1.5 percent of GDP in 2024.

Pakistan’s ability to secure external financing remains a point of contention, although recent tax reforms have shown promise by boosting revenue collection by 29.5 percent. ADB suggests that further tax reforms will be instrumental in strengthening revenue mobilization efforts, thus contributing to the country’s economic stability.

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The ADB report underscores the importance of proactive measures to address the economic challenges facing Pakistan, emphasizing the need for comprehensive reforms and international support to navigate the complexities of the global economic landscape.

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