ISLAMABAD: The upcoming national elections may change Pakistan’s economic policies, which in return could put the upward growth trajectory at risk, cautioned the World Bank on Monday, while projecting 5.2 percent economic growth for this year.
“The upcoming national election in 2018 may affect reform momentum and macroeconomic policy orientation (of Pakistan),” said World Bank’s biannual South Asia Economic Focus Report 2017.
It added that there were significant downside risks to the projected positive economic outlook for Pakistan.
Among the risks that the World Bank highlighted were slower progress on much-needed structural reforms, lingering uncertainty about US economic policy, a strong rupee, and protracted global economic weakness.
The bank is the third global financial institution that has sensed a change in the past three weeks. Earlier, the IMF and the Asian Development Bank also expressed similar concerns.
The IMF has warned that Pakistan’s “hard-won” economic stability was at risk due to challenges on the fiscal, energy, and external sector fronts.
The World Bank report stated that slower progress on structural reforms could weaken growth prospects. It added that a stable nominal exchange rate of the rupee versus the US dollar had resulted in appreciation of the Real Effective Exchange Rate, which was hurting exports.
Furthermore, lingering uncertainty about the course of US economic policy and the possibility of a protracted global economic weaknesscould negatively affect exports.
The bank said Pakistan was also vulnerable to any significant decline in remittance flows, particularly from oil-rich countries that contribute about two-thirds of all remittances. Pakistan’s growth prospects continue to improve and inflation remains contained.
