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IMF projects stable growth in Pakistan

Updated Apr 19, 2017 07:58am

WASHINGTON: The Inter­national Monetary Fund (IMF) projected on Tuesday that Pakistan’s economy will continue to grow at a healthy pace in 2017 and 2018.

The World Economic Outlook, which precedes this week’s annual spring meeting of the IMF and the World Bank, also predicted a noticeable growth in the global economy in 2017, linked to an upsurge in investment, manufacturing and trade activities. The report projects that the world growth is expected to rise to 3.5 per cent this year and 3.6pc in 2018, from 3.1pc last year.

“In Pakistan, a broad-based recovery is expected to continue at a healthy pace, with growth forecast at 5pc in 2017 and 5.2pc in 2018, supported by ramped-up infrastructure investment,” the report added.

The report points out a weak growth in the near-term outlook for the Middle East, North Africa, Afghanistan, and Pakistan

region, with growth forecast to be 2.6pc in 2017, 0.8 percentage point lower than projected in the October 2016 report.


World economy to expand 3.5pc this year


The fund attributes this subdued pace of expansion to lower headline growth in the region’s oil exporters, driven by the November 2016 Opec agreement to cut oil production. This weakness overshadows the expected pickup in non-oil growth as the pace of fiscal adjustment to structurally lower oil revenues slows.

“Continued strife and conflict in many countries in the region also detract from economic activity,” the report warns.

Growth in Saudi Arabia, the region’s largest economy, is expected to slow to 0.4pc in 2017 because of lower oil production and ongoing fiscal consolidation, before picking up to 1.3pc in 2018.

Growth rates in most other countries in the Cooperation Council of the Arab States of the Gulf are similarly projected to dip in 2017.

By contrast, activity in most of the region’s oil importers is expected to continue to accelerate, with growth rising from 3.7pc in 2016 to 4.0pc in 2017 and 4.4pc in 2018.

In Egypt, comprehensive reforms are expected to deliver sizable growth dividends, lifting growth from 3.5pc in 2017 to 4.5pc in 2018. The report trims India’s annual growth forecast by 0.4 percentage points to 7.2pc for 2017, citing the impact of recent demonetisation.

“In India, the growth forecast for 2017 has been trimmed by 0.4 percentage point to 7.2pc, primarily because of the temporary negative consumption shock induced by cash shortages and payment disruptions from the recent currency exchange initiative,” says the report.

“Medium-term growth prospects are favourable, with growth forecast to rise to about 8pc over the medium term due to the implementation of key reforms, loosening of supply-side bottlenecks, and appropriate fiscal and monetary policies,” it adds.

In its review of the globally economy, the IMF notes that stronger activity and expectations of more robust global demand, coupled with agreed restrictions on oil supply, have helped commodity prices recover from their troughs in early 2016.

The IMF’s October forecast was more pessimistic, cutting its growth forecast for the US and other advanced economies, the IMF said then that the global economy would grow 3.4pc this year versus 3.1pc in 2016.

But in Tuesday’s report, the IMF notes that higher commodity prices have provided some relief to commodity exporters and helped lift global headline inflation and reduce deflationary pressures.

“Financial markets are buoyant and expect continued policy support in China and fiscal expansion and deregulation in the United States. If confidence and market sentiment remain strong, short-term growth could indeed surprise on the upside,” it adds.

But the report warns that “structural impediments,” such as low productivity growth and high income inequality, will likely persist and could stall a stronger recovery.

The report also criticises “nationalistic” economic policies of the United States and other European Union, and calls them “inward-looking policies” that “threaten global economic integration and the cooperative global economic order, which have served the world economy, especially emerging market and developing economies, well.”

The report notes that against this backdrop, economic policies have “an important role to play in staving off downside risks and securing the recovery, and a renewed multilateral effort is also needed to tackle common challenges in an integrated global economy.”

The IMF points out that emerging market and developing economies have become increasingly important in the global economy in recent years. They now account for more than 75pc of global growth in output and consumption, almost double the share of just two decades ago.

“These economies can still get the most out of a weaker growth impulse from external conditions by strengthening their institutional frameworks, protecting trade integration, permitting exchange rate flexibility, and containing vulnerabilities arising from high current account deficits and external borrowing, as well as large public debt,” the World Economic Outlook projects.

Published in Dawn, April 19th, 2017


Comments (37) Closed

Jto
Apr 19, 2017 08:13am

With cpec and Chinese industry will reach 9 percent growth. Great going

mohammad Hund
Apr 19, 2017 08:47am

Does IMF and WB want Pakistan borrow more money from them? Are they now feeling competition from China? CPEC is here to stay...

Dil
Apr 19, 2017 08:57am

Good going still there are challenges when it comes to trade deficit , increase in debt and local industry isnt able to create more jobs .

whiteflag
Apr 19, 2017 09:18am

agriculture based Indian economy is like an iceberg only 1/9 part of its potential is visible.

Vijay
Apr 19, 2017 09:29am

According to latest Pwc Report,India Will be a $10 trillion economy before 2030. and pakistan will be around $800 billion.Per Capita of Indian would be Around double that of pakistan. And for the report of 2050,India will be $30 trillion economy, pakistan would be $2.8 trillion. Per capita of India $30000(Near INR20Lakh, acc. to current inr to $ rates)and pakistan would have per capita of $12000. Pwc is a world's topmost multinational professional services network headquartered in London. At Last, There is a reason why India is the Fastest Developing Country in the world.

K Be Like PK?
Apr 19, 2017 09:46am

Good news due to infrastructure spend

Shahid
Apr 19, 2017 11:21am

Can anyone name one country that prospered following IMF's plans?

kevin
Apr 19, 2017 11:26am

Ohh Indias growth rate is 7.2 to 8 %. Wahh it is more than Chinas 6.8 means in few years India will be more developed than China.

Bilal AHMEDIYYA
Apr 19, 2017 12:06pm

while CPEC loans grows at 8 pc interest

Wajahat
Apr 19, 2017 01:06pm

@Jto Just to be realistic CPEC is a trade route and trade routes don't massively impact GDP,It's job creation,Purchase power and Trade balance.If CPEC would really boost economies as it's is misinterpreted then every country in Asia and Africa would line up in China offering them to build a trade route in their country.

N.Sid
Apr 19, 2017 01:12pm

@Vijay Delusional thinking, it is based on ideal scenario, which is changing....Currently India per capita income at 1600 USD nominal ranks it about 140 th in the world.

With Australia, Singapore slapping Visa restrictions, US curtailing the number of H-1b tech visas, and highest salary ceiling, about 6.3 lacs Indians will lose IT related Jobs in coming years, slow down in exports, 260 billion USD against the projected 500 billion USD in 2016. Many other factors, will make this prediction fail in coming years.

N.Sid
Apr 19, 2017 01:15pm

@Vijay Just to add...how easy it is for Indian media to create fake delusions about highest FDI in India, China received 260 billion USD as FDI last year compared to less than 60 billion USD for India...Google search can make it clear.

I comes across all sort of skewed/distorted figures in India media which later proves to be wrong...

M. Emad
Apr 19, 2017 01:41pm

IMF 2017 GDP outlook: Pakistan-5.0%, Bangladesh-6.9%, India-7.2%.

Syed H
Apr 19, 2017 02:00pm

@Vijay While I wish you all the luck, but future projections are just that, projections. How many organisations saw the financial crash of 2008 coming (or the Great Depression of the 1930s or the OPEC induced shock of the 1970s)? How many predicted when Deng Xiaoping began the changes he did in 1978 that China would be where it is today? Brazil had rapid growth for the 3 decades till 1980; it was taken as a given during this period that it would be developed first world nations now, but, obviously, it is not. South Korea was regarded as such a hopeless place, that US Congressional delegations, informed by the most cutting-edge economic analysis of the time, argued during the Cold War to end all US assistance to it.

The Chinese, and the South Koreans and Japanese before them, did not wait, or care, for some Western organisation to tell them they would succeed. Unlike South Asians, their national character is averse to such deference to the West. Maybe that is why they did succeed.

SAEED
Apr 19, 2017 02:25pm

@Vijay - What is the comparison stat between India and China?

Princess_of_DHUMP
Apr 19, 2017 03:10pm

To hell with growth and stability. We are addicted to instability. Let's kick some PMs out on cooked up charges

SID
Apr 19, 2017 03:19pm

@kevin Not in few years, but few decades ( provided China growth cools down to sub 5% & India will maintain 8% plus growth for next 2 decades .)

Abdulkarim
Apr 19, 2017 03:30pm

@Shahid Turkey for one.Jordon,Japan,south korea and also India had meaningful gains from it.However the leading cause of the IMF program is due to the failure of the client country to implement the advised policy reforms.

HIBISCUS
Apr 19, 2017 03:58pm

@N.Sid Maybe you should read more carefully. India received more greenfield FDI than other countries.

Syed daniyal ahmed
Apr 19, 2017 04:08pm

Great timing for such news. This will generate enough sympathy for our PM to not be disqualified. Looks like IMF do know what they're doing.

N.Sid
Apr 19, 2017 04:10pm

@HIBISCUS Greenfield FDI...it is like saying Pakistan received more CPEC FDI than India...it is the total sum which matters...

SID
Apr 19, 2017 04:12pm

@N.Sid If GDP nominal is the basis of growth & prosperity , China rank is at 70 . There are 69 country who has more GDP nominal than China . Still China claim they are super power.

N.Sid
Apr 19, 2017 04:22pm

@SID True China per capita GDP is low compared to US and all of western European countries...but per capita GDP is a true measure of prosperity and multidimensional growth...not ideal though. HDI is better index.

China never plays this hegemonic super power kind of act...want to include all the regional players in OBOR and CPEC...never heard any Chinese pretending to be something. It is peculiar to India and it's people...

john
Apr 19, 2017 04:25pm

@Syed H Sir, the crisis was predicted by economists http://timesofindia.indiatimes.com/india/When-Raghuram-Rajan-predicted-the-2009-US-financial-crisis/articleshow/52631378.cms

SID
Apr 19, 2017 04:31pm

@N.Sid " China never plays this hegemonic super power kind of act "

Have you heard about South China sea dispute ??

SID
Apr 19, 2017 04:35pm

@N.Sid Even in HDI index China ranked 90 & India ranked 131.

South Asia
Apr 19, 2017 04:37pm

@N.Sid And the highly skilled labor will return to us, which also includes IITians

SID
Apr 19, 2017 04:41pm

@N.Sid OBOR or CPEC are not generosity of china. It is the absolute necessity of china to sell their surplus product in other countries under pretext .

SID
Apr 19, 2017 04:44pm

@N.Sid Coming to Australia , US, Singapore ..today they are trying to reduce overseas worker, tomorrow they will try to curb cheap Chinese goods which are hurting their domestic manufacturer .

And this will become reality .

N.Sid
Apr 19, 2017 04:52pm

@SID South China sea dispute is very complex with too many players...China has more rights as this is the main sea corridor for her. Here actually US is playing the role of an uninvited policeman, with hegemonic designs...a true super power act. China is an underdog here confronting US...

SID
Apr 19, 2017 05:10pm

@N.Sid US came in to SCS issue after China refused to honor the international court verdict . And what is the purpose of creating artificial island & keep aircraft , missile in a major shipping lane ?

If tomorrow India creates artificial military island in Arabian sea ,will China remain silent ( even though they have no link with Arabian sea ) ?

South Asia
Apr 19, 2017 05:15pm

@N.Sid China is trying to bully Japan, Vietnam, Thailand, South Korea, Philippines etc etc in SCS dispute. But even these small countries are not letting go. They are not scared of Chinese tactics, which is very brave of them.

N.Sid
Apr 19, 2017 05:35pm

@SID India does has Army/Airforce bases in Nicobar-Andaman islands, in the Indian oceans...China doesn't has that privilege hence making artificial ones. China trade from this main SCS corridor is in excess to 3800 billion USD.

Any sea corridor with strategic value need protection and blue navy presence.

@SOUTH ASIA Thailand and Philippines are neutral in SCS issue, I concur, they are not against China's narrative here.

sir
Apr 19, 2017 05:52pm

@N.Sid China is your friend that's why you are saying it is ok to construct artificial islands. No country can construct artificial islands in international waters. It is against international law.

Essaki
Apr 19, 2017 06:27pm

Wow everyone in pakistan is talking about india it means we are in right track of growth. We are developing fast and we will overcome all hurdles and remains worlds biggest economy in coming decades. Jai hind

SID
Apr 19, 2017 09:00pm

@N.Sid South Korea & Japan also use SCS as shipping lane. They should also set up artificial island base in SCS to protect their interest .

seeker
Apr 20, 2017 05:18pm

@Syed H Good observations sir. @VIJAY my humble suggestion is to keep India out of this discussion. Pakistan is perhaps as behind us as we are behind China. We in India have different issues and are at different point on the curve. If Pakistan can get rid of the extremist elements (will take policy change) and focus on education, development, etc. then it will surge. We too need to focus n education, original research, inclusive growth, etc. while eliminating divisive elements (that somehow on the rise) in India. I dare say that we stand a better chance while wishing best luck to our Pakistani friends.

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