Pakistan’s Economy is Plagued By Political Instability: ADB

The future of Pakistan’s economy is plagued by political instability and potential disruptions from Middle East conflicts could affect supply chains, the Asian Development Bank (ADB) said in a report on Thursday. ADB said Pakistan’s reliance on external financing makes policy implementation crucial. It urged IMF support for reforms to boost market confidence and attract affordable financing. Economic growth is projected at 2.8% for FY25, driven by confidence, reforms, and stability. Meanwhile, ADB sees growth to remain slow in FY24 but improve with reforms. Inflation is projected at 25 percent for 2024, driven by energy prices, but expected to ease in 2025. Food supply may improve and energy price hikes could sustain inflation. ADB said despite challenges, growth in agriculture and manufacturing is anticipated. The lender remarked that relaxation of import restrictions and economic recovery may widen the current account deficit to 1.5 percent of GDP in 2024. Pakistan faces challenges in securing external financing, but tax reforms have boosted revenue collection by 29.5 percent. Further tax reforms will strengthen revenue mobilization, it added.