Pakistan’s GDP is likely to grow by two percent in the current fiscal provided the country successfully rolls out its COVID-19 vaccination programme and implements stabilisation measures properly, the Asian Development Bank (ADB) predicted.

 “Assuming successful vaccine rollout and the implementation of economic reform under a stabilisation programme with the International Monetary Fund (IMF), GDP is expected to grow by 2 percent in FY2022 as consumption strengthens and investor confidence improves,” the ADB said in its flagship Asian Development Outlook (ADO) 2021, according to a Dawn report.

However, the economic outlook is subject to downside risks, depending on persistent containment measures and success in achieving the vaccination target of 70 percent of the eligible population by December 2021 end.

The ADB’s forecast is closer to 1.3 percent growth forecast by the World Bank and 1.5 percent by the IMF when compared to 2.9 percent and 3 percent growth estimates by the Ministry of Finance and State Bank of Pakistan, the report said.

The ADB said inflation would be down to 8.7 percent this year against 10.7 percent last fiscal. It said the real GDP reversed growth at 1.9 percent in FY2019 to contract by 0.4 percent in FY2020 as economic activity was depressed by COVID-19 containment measures and earlier economic stabilisation efforts initiated before the pandemic. “The downturn was worsened by currency depreciation and fiscal tightening.”

The Manila-based lending agency forecast that the South Asian region would post a 9.5 percent growth this year, led by 11 percent in India and 13 percent in Maldives. Bangladesh’s economy would grow by 6.8 percent, while Afghanistan and Nepal would see about 3 percent GDP growth rate and Sri Lanka 4.1 percent. Bhutan economy would be contract by 3.4 percent.

The ADB said Pakistan’s agriculture was forecast to see slower growth, mainly because of a sharply lower cotton harvest following heavy rains, pest attacks and continued contraction in cultivated area.

Industry and services already show signs of recovery in FY2021 with fiscal incentives granted to key construction and export industries and subsidised credit offered to protect employment and stimulate growth. Industry appears poised for robust growth led by manufacturing and construction, Dawn said in its report.