The Asian Development Bank (ADB) has said Pakistan’s economic growth in the previous fiscal year was weighed down by tighter monetary and fiscal policies pursued by the government to safeguard macroeconomic stability, pervasive inflation and significant damage from flooding.

In its Asian Development Outlook (ADO) July 2023 published on Wednesday, the ADB said the GDP projections for Nepal and Pakistan were “adjusted down for FY2023 and maintained for FY2024”.

In its April outlook, the ADB had forecasted Pakistan’s GDP growth at 0.6pc for FY23 and 2pc for FY24.

Today’s July outlook said that the forecast for the current fiscal year was “maintained on the assumption that external and domestic conditions improve”.

“The ADO April 2023 projection for Pakistan in FY2024 assumes that the government will continue reform as recommended by the IMF (International Monetary Fund) under a new policy-support programme approved on July 12,” the Manila-based lending agency said.

Regarding inflation in Pakistan, the report stated that the actual inflation in Pakistan in fiscal year 2023 was higher than projected.

“Continued demand-side pressures in Pakistan play an outsized role in the upward revision of the sub-regional inflation forecast for 2024,” it said

ADB maintained its growth outlook for developing economies in Asia and the Pacific at 4.8pc this year, as robust domestic demand continued to support the region’s recovery.

Inflation was expected to continue falling, approaching pre-pandemic levels as fuel and food prices decline, according to the ADO.

Inflation for “Developing Asia” — the 46 developing members of the ADB — was forecasted at 3.6pc this year, compared with an April forecast of 4.2pc. The inflation outlook for 2024, meanwhile, was raised to 3.4pc from an earlier estimate of 3.3pc.

The outlook said China’s reopening was bolstering the region’s growth.

China’s economic growth was projected at 5pc this year, unchanged from the April forecast, amid strong domestic demand in the services sector.

However, demand for Developing Asia’s exports of electronics and other manufactured goods was slowing, as monetary tightening dragged on economic activity in major advanced economies.

The region’s growth forecast for 2024 was marginally revised down to 4.7pc from a 4.8pc estimate in April.

“Asia and the Pacific continue to recover from the pandemic at a steady pace,” ADB Chief Economist Albert Park was quoted as saying in an accompanying press release.

“Domestic demand and services activity is driving growth, while many economies are also benefiting from a strong recovery in tourism.

“However, industrial activity and exports remain weak, and the outlook for global growth and demand next year has worsened,” he added.