The World Bank has sounded the alarm on Pakistan's economic course in its latest biannual report, painting a grim picture of the nation's financial health.
The World Bank's biannual Pakistan Development Outlook report has highlighted significant challenges ahead, with over 10 million individuals at risk of falling into poverty amidst sluggish economic growth and soaring inflation.
The international lender is concerned about the South Asian nation's weak economic growth of just 1.8% and the skyrocketing inflation rate of 26% in the current fiscal year.
Despite efforts at economic recovery, Pakistan's growth is projected to stagnate at a meagre 1.8%, with poverty rates hovering around 40%. The report underscores the vulnerability of those just above the poverty line, with about 10 million people facing the threat of slipping into poverty.
The World Bank has also said that the country will be falling short of its primary budget target. It is expected to remain in deficit for three years in a row.
Rising inflation and limited wage growth continue to worsen the cost-of-living crisis. According to the report, daily labourers' wages increased only five per cent in nominal terms during the first quarter of this fiscal year when the inflation was above 30%. This has, in turn, impacted education and healthcare access for several families nationwide.
Now, as the cost-of-living crisis worsens, the report has also pointed out that food security remains a concern in parts of the country. This is mainly in regions affected by natural disasters like the 2022 floods. Districts across Khyber Pakhtunkhwa, Sindh and Balochistan were severely impacted.
Moreover, policy uncertainty, low foreign reserves, and persistent fiscal deficits compound Pakistan's economic woes. The country's current account deficit has narrowed, but challenges persist, including declining remittances and elevated inflation rates.
Looking ahead, the World Bank projects subdued economic growth for Pakistan, falling short of official targets. It has predicted only a 2.3% economic growth rate for the next financial year. The figures are even lower than the population growth rate of 2.6%.
With fiscal consolidation measures underway, the road to recovery remains uncertain for Pakistan, posing significant risks to its social and economic stability.
(With PTI inputs)